Please use this identifier to cite or link to this item:
http://dspace.mediu.edu.my:8181/xmlui/handle/10419/18854| Title: | Contracts, fairness, and incentives |
| Keywords: | J3 C7 C9 ddc:330 moral hazard incentives bonus contract fairness inequity aversion Anreizvertrag Gerechtigkeit Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | |
| Description: | We show experimentally that fairness concerns may have a decisive impact on both the actual and the optimal choice of contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become inferior when some agents value fairness. Conversely, implicit bonus contracts that are doomed to fail among purely selfish actors provide powerful incentives and become superior when there are some fair-minded players. The principals understand this and predominantly choose the bonus contracts, even preferring a pure bonus contract over a contract that combines the enforcement power of explicit and implicit incentives. This contract preference is associated with the fact that explicit incentives weaken the enforcement power of implicit bonus incentives significantly. Our results are largely consistent with recently developed theories of fairness, which also offer interesting new insights into the interaction of contract choices, fairness and incentives. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/18854 |
| Other Identifiers: | http://hdl.handle.net/10419/18854 ppn:392916681 |
| Appears in Collections: | EconStor |
Files in This Item:
There are no files associated with this item.
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.