Bonus and penalty incentives contract choice by employees

Luft, Joan L.

doi:10.1016/0165-4101(94)00361-0

Cited by 187 publications

(97 citation statements)

References 27 publications

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“…The tendency of people to avoid penalties is documented in several experimental studies and holds true in diverse economical contexts. For example, tax rules [23] or contracts [21] are less likely to be accepted when they are presented as penalties rather than as bonuses. The consequences of penalty aversion are decisions where penalty costs are higher weighted than out-of-pocket costs -another example that the different assessment of cost types can lead to a different behavior.…”

Section: Introductionmentioning

confidence: 98%

On the assessment of costs in a newsvendor environment: Insights from an experimental study

Schiffels

Fügener

Kolisch

et al. 2014

Omega

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Section: Introductionmentioning

confidence: 98%

On the assessment of costs in a newsvendor environment: Insights from an experimental study

Schiffels

Fügener

Kolisch

et al. 2014

Omega

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“…However, note that some JDM research, particularly in management accounting, relies heavily on economic theory in addition to psychology theory (e.g Luft, 1994;Farrell et al, 2007)Libby and Luft (1993) andLibby et al (2002).…”

mentioning

confidence: 99%

Fifty-year overview of judgment and decision-making research in accounting

Trotman

Tan

Ang

2011

Accounting &Amp; Finance

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As part of the celebration of the fiftieth anniversary of AFAANZ, we consider the breadth of judgment and decision-making (JDM) experimental research in accounting over that 50-year period. Our review is divided by decade and between auditing, financial accounting and management accounting. In four major journals, we found 5745 papers between 1970 and 2009, which we consider impressive and strong support for the opportunity to publish in this field. Our aim is to encourage more JDM research from Australians and New Zealanders, and to allow researchers in particular specialisations to get a better understanding of the JDM research in other specialisations.

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“…The results of the above-mentioned experiments that incorporate an endogenous contract choice indicate that incentive contracts framed as bonus contracts are preferred over contracts framed as penalty contracts (for a discussion see also Luft, 1994). They also show that trust contracts, i. e. contracts without explicit incentives, are rarely chosen by the employer.…”

Section: Experimental Evidencementioning

confidence: 81%

Monitoring and Pay: An Experiment on Employee Performance Under Endogenous Supervision

Dittrich

Kocher

2011

SSRN Journal

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We present an experimental test of a shirking model where monitoring intensity is endogenous and effort a continuous variable. Wage level, monitoring intensity and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, monitoring and pay should be complements. In our experiment, between and within treatment variation is qualitatively in line with the normative predictions of the model under standard assumptions. Yet, we also find evidence for reciprocal behavior. Our data analysis shows, however, that it does not pay for the employer to solely rely on the reciprocity of employees.

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Bonus and penalty incentives contract choice by employees

Cited by 187 publications

References 27 publications

On the assessment of costs in a newsvendor environment: Insights from an experimental study

On the assessment of costs in a newsvendor environment: Insights from an experimental study

Fifty-year overview of judgment and decision-making research in accounting

Monitoring and Pay: An Experiment on Employee Performance Under Endogenous Supervision

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