Reciprocity and incentive pay in the workplace

Dur, Robert; Non, Arjan; Roelfsema, Hein

doi:10.1016/j.joep.2010.05.001

Cited by 52 publications

(39 citation statements)

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“…Another paper that studies the relation between reciprocal motivations and incentive pay is Dur, Non, and Roelfsema (2008). However, their model does not allow for monetary gift-exchange, but focuses on social gift-exchange instead, meaning that the resources of the gift-exchange are non-monetary.…”

Section: Related Literaturementioning

confidence: 99%

“…When applicable, I rule out unreasonable beliefs by requiring that beliefs satisfy the intuitive criterion. 12 In addition, I make some simplifying assumptions on the altruism functions of the worker. Speci…cally, I assume that a sel…sh worker type never takes the principal's welfare into account regardless of the principal's altruism ( l (b j ) = 0 for any b j ) and that a reciprocal worker type is completely egoistic when he believes that the principal is sel…sh ( h (b l ) = 0).…”

Section: Simplifying Assumptionsmentioning

confidence: 99%

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Gift-Exchange, Incentives, and Heterogeneous Workers

Non

2010

SSRN Journal

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Using a formal principal-agent model, I investigate the relation between monetary gift-exchange and incentive pay, while allowing for worker heterogeneity. I assume that some agents care more for their principal when they are convinced that the principal cares for them. Principals can signal their altruism by o¤ering a generous contract, consisting of a base salary and an output-contingent bonus. I …nd that principals signal their altruism by o¤ering relatively weak incentives and a relatively high expected total compensation, but the latter does not necessarily hold. Furthermore, since some agents do not reciprocate the principal's altruism, the principal may …nd it optimal to write a contract that simultaneously signals his altruism and screens reciprocal worker types. I show that such a contract is characterised by excessively strong incentives and relatively high expected total compensation.

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Section: Related Literaturementioning

confidence: 99%

Section: Simplifying Assumptionsmentioning

confidence: 99%

Gift-Exchange, Incentives, and Heterogeneous Workers

Non

2010

SSRN Journal

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“…Dur et al (2008) also model the link between reciprocity and individual based incentives but consider a setting in which worker efforts are reciprocal to management attention. They show that the optimal contract in this setting should rely on promotion incentives rather than on individual bonuses.…”

Section: Body Heightmentioning

confidence: 99%

Profit Sharing and Reciprocity: Theory and Survey Evidence

Cornelißen

Heywood²,

Jirjahn³

2010

SSRN Journal

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SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly. Department of Economics, University of Wisconsin-Milwaukee Uwe Jirjahn Department of Economics, University of TrierAbstract: The 1/n problem potentially limits the effectiveness of profit sharing in motivating workers. While the economic literature suggests that reciprocity can mitigate this problem, it remains silent on the optimal degree of reciprocity. We present a representative model demonstrating that reciprocity may increase productive effort but may also increase unproductive effort such as socializing on the job. The model implies that reciprocity increases profit up to a point but decreases profit beyond that point. Using detailed survey measures of worker reciprocity, we show that the probability of receiving profit sharing takes an inverse U-shape as reciprocity increases. This supports the general implication of the model and is shown to exist for both positive and negative reciprocity and to remain when a series of ability proxies and detailed industry indicators are included.

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“…Dur et al (2010) call attention to the many benefits good relationships between principals and agents may yield to the firm and emphasize the fact that such relationships may motivate workers more powerfully than pecuniary incentives. Employees' effort and the employer's benevolent treatment of workers are modeled as reciprocal gifts, and the signaling of good intentions on the part of principals, though costly, appears as a possibly efficient strategy (Non 2012;Sliwska 2007).…”

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confidence: 99%

“…To sum up, even in the agency models that introduce relational and moral motives into utility functions, individuals are calculative rather than relational beings (Non 2012;Dur et al 2010;Sliwka 2007). The relational and moral abilities of persons are submerged by the self-interested calculative abilities of individuals: relating with others and following behavioral norms result from individualistic, enlightened, calculations, not from moral capacity: "We do not assume that people follow a social norm for its own sake, but we investigate how such a rule is sustained by selfinterested community members" (Kandori 1992: 63 (Pepper and Gore, 2015).…”

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confidence: 99%

Agency theory and social interactions at work

Lopes

2016

Review of Social Economy

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Abstract:The main aim of this paper is to show that even when integrating the findings of behavioral economics, agency theory's conception of interactions at work does not actually account for cooperative behavior. The paper draws on the distinction between the concepts of individual and person to critically examine this conception and show that, while work is mostly organized on the assumption that workers are self-interested individuals, management rhetoric addresses workers as persons in an attempt to prompt their cooperation and personal commitment. This managerial paradox may partly be due to the prevalent influence of agency theory's prescriptions and has been contributing to a severe deterioration of the quality of working life. But it also indicates that agency theory has to confront serious theoretical and prescriptive dilemmas. AcknowledgementsThis paper greatly benefited from the project "L'entreprise, formes de la propriété et responsabilités sociales" and in particular from the stimulating and helpful comments of Olivier Favereau, Baudoin Roger and other project participants. Financial support from the Collège des Bernardins is gratefully acknowledged.2 "… men, not Man, live on the earth and inhabit the world" (Arendt 1958: 7)

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Reciprocity and incentive pay in the workplace

Cited by 52 publications

References 45 publications

Gift-Exchange, Incentives, and Heterogeneous Workers

Gift-Exchange, Incentives, and Heterogeneous Workers

Profit Sharing and Reciprocity: Theory and Survey Evidence

Agency theory and social interactions at work

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