Author: Jan BouwensPublisher:
ISBN:
Category :
Languages : en
Pages : 30
Book Description
Effort and Selection Effects of Incentive Contracts
Author: Jan BouwensEffort and Selection Effects of Incentive Contracts
Author: J. L. BouwensPerformance Measure Properties and the Effect of Incentive Contracts
Author: Jan BouwensPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Using data from a third-party survey on compensation practices at 151 Dutch firms, we show that less noisy or distorted performance measures and higher cash bonuses are associated with better-directed effort and improved employee selection. Specifically, 1) an increase in the cash bonus increases the selection effects of incentive contracts, but does not independently affect the effort that employees deliver, and 2) performance measure properties directly impact both effort and the selection functioning of incentive contracts. These results hold after controlling for an array of incentive contract design characteristics and for differences in organizational context. Our estimation procedures address several known problems with using secondary datasets.
Effects of Incentive Contracts in Research and Development
Author: Edward B. RobertsPublisher: Forgotten Books
ISBN: 9780666180346
Category : Reference
Languages : en
Pages : 48
Book Description
Excerpt from Effects of Incentive Contracts in Research and Development: A Preliminary Research Report In the past several years an effort has originated in the Defense Department (and followed by other government agencies) to discourage the use of cost-p1us=fixed fee (cpff) contracts and substitute contractual incentive arrangements. This effort supposedly relies upon the profit motive to reduce requirements for direct government control and to stim ulate better contractor performance and cost estimating. Incentive type contracts are not new in government contracting. Production contracts have been awarded on a fixed price basis for many years. The fixed price contract provides maximum correlation of contract profits with contract cost, and in theory might offer maximum cost incentive. How ever the use of incentive arrangements on r&d contracts is the novel feature of the dod (and nasa) programs of the past several years. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
The Theory of Incentives
Author: Jean-Jacques LaffontPublisher: Princeton University Press
ISBN: 1400829453
Category : Business & Economics
Languages : en
Pages : 436
Book Description
Economics has much to do with incentives--not least, incentives to work hard, to produce quality products, to study, to invest, and to save. Although Adam Smith amply confirmed this more than two hundred years ago in his analysis of sharecropping contracts, only in recent decades has a theory begun to emerge to place the topic at the heart of economic thinking. In this book, Jean-Jacques Laffont and David Martimort present the most thorough yet accessible introduction to incentives theory to date. Central to this theory is a simple question as pivotal to modern-day management as it is to economics research: What makes people act in a particular way in an economic or business situation? In seeking an answer, the authors provide the methodological tools to design institutions that can ensure good incentives for economic agents. This book focuses on the principal-agent model, the "simple" situation where a principal, or company, delegates a task to a single agent through a contract--the essence of management and contract theory. How does the owner or manager of a firm align the objectives of its various members to maximize profits? Following a brief historical overview showing how the problem of incentives has come to the fore in the past two centuries, the authors devote the bulk of their work to exploring principal-agent models and various extensions thereof in light of three types of information problems: adverse selection, moral hazard, and non-verifiability. Offering an unprecedented look at a subject vital to industrial organization, labor economics, and behavioral economics, this book is set to become the definitive resource for students, researchers, and others who might find themselves pondering what contracts, and the incentives they embody, are really all about.
Ambiguity in Performance Pay
Author: David J. CooperPublisher:
ISBN:
Category :
Languages : en
Pages : 50
Book Description
Many incentive contracts are inherently ambiguous, lacking an explicit mapping between performance and pay. Using an online labor market, Amazon Mechanical Turk, we study the effect of ambiguous incentives on willingness to accept contracts to do a real-effort task, the probability of completing the task, and performance at the task. Even modest levels of ambiguity about the relationship between performance and pay are sufficient to eliminate the positive selection effect associated with piece rates, as high ability individuals are no more likely than low ability individuals to accept a contract. Piece rate contracts significantly improve performance relative to fixed wages, primarily due to selection, but this positive effect is not present with ambiguous incentive contracts. Modest levels of ambiguity reduce the probability that subjects accept an incentive contract and all types of ambiguous incentive contracts increase the probability of quitting after having accepted an incentive contract. Information about individual ability at the task reduces the probability that subjects choose and complete the task.
Distinguishing Incentive from Selection Effects in Auction-determined Contracts
Author: Laurent LamyDecision Aids and the Design of Incentive Compensation Contracts
Author: Elaine G. MauldinThe Effects of Tournament Incentive Contracts and Relative Performance Feedback on Task Effort, Learning Effort, and Performance
Author: George LeePublisher:
ISBN:
Category :
Languages : en
Pages : 184
Book Description
When employees work hard, they exert more effort on job tasks (task effort); and when employees learn hard, they exert more effort to learn (learning effort). Task effort and learning effort are important causes of improved performance. This thesis investigates whether the use of tournament schemes motivates employees to work harder and learn harder, and also whether providing performance feedback in tournament schemes has any impact on task effort and learning effort.This thesis has three goals. The first is to investigate the relationship between incentives, learning, and performance. The literature on whether learning interacts with incentives to improve performance is inconclusive, because no prior research has provided a good test of this question (as noted by Bonner and Sprinkle 2002; Bailey and Fessler 2011; Bailey et al. 1998, and as remains true today). The second goal is to investigate the motivational effect of tournament schemes on effort. The literature suggests that effort is difficult to observe directly or to quantify; as a result, it is hard to verify whether tournament schemes motivate employees' task effort and learning effort. This thesis uses an eye-tracking device to measure effort, by measuring eye position, eye movements, and pupil size. The third goal is to investigate the effect of performance feedback on task effort, learning effort, and performance in the tournament setting.I posit and show evidence that both task effort and learning effort are higher in multiple-winner schemes than in either winner-takes-all schemes or piece-rate schemes. Task effort is directly positively associated with performance, while learning effort causes learning transfer to a job task, also yielding a positive effect on performance. I find that providing relative performance feedback in the tournament setting has no significant impact on task effort or learning effort.These findings have practical value for many corporations, which are constantly re-evaluating the effectiveness of their incentive schemes and reporting systems while investing in learning initiatives to help employees transfer learned skills to job tasks. Organizations may use the insights of this thesis to help them design learning initiatives and motivate employees to transfer learned skills to their job tasks.
The Performance Implication of Goal Achievability in Incentive Contracts and Feedback
Author: Yasheng ChenPublisher:
ISBN:
Category :
Languages : en
Pages : 26
Book Description
This study investigates the performance feedback and goal achievability in incentive effects on employees' effort and performance. We perform an experiment to examine whether the use of goal-specific feedback and incentive contracts have an interaction effect on task performance. Using the Mirametrix S2 eye tracking device to measure the level of effort, we find that the feedback effect on effort depend on goal achievability specified in the incentive contract. Specifically, we find that when employees are contracted based on achievable goals, feedback decreases their level of effort. By contrast, when employees are contracted based on more challenging but attainable goals, feedback increases their level of effort. Furthermore, we find that the level of effort has a significant positive impact on task performance. These findings have important implications for the design of control and compensation systems in organizations that aim for a higher employees' performance.