The Nexus between Contract Duration and the Use of Formal and Informal Incentive Pay
- Autor(en)
- Dominique Demougin, Oliver Fabel
- Abstrakt
We investigate a firm's choice of formal and informal effort incentives in a repeated game setting with undistorted signaling and liquidity‐constrained agents. The model allows for a simple geometric representation of credibility and incentive‐feasibility effects on optimal contract design. If credibility constitutes a binding constraint, explicit, i.e. enforceable, performance pay and discretionary salary promises are unambiguous substitutes and higher employee performance is associated with lower‐powered bonus pay. Using personnel data from an insurance company, we show that the model's predictions regarding the mediating role of expected contract duration on these relationships are consistent with remuneration practices.
- Organisation(en)
- Institut für Rechnungswesen, Innovation und Strategie, Institut für Business Decisions and Analytics
- Externe Organisation(en)
- University of Liverpool, Université Paris II - Panthéon-Assas
- Journal
- Labour
- Band
- 33
- Seiten
- 351-370
- Anzahl der Seiten
- 20
- ISSN
- 1121-7081
- DOI
- https://doi.org/10.1111/labr.12151
- Publikationsdatum
- 09-2019
- Peer-reviewed
- Ja
- ÖFOS 2012
- 502026 Personalmanagement
- Schlagwörter
- ASJC Scopus Sachgebiete
- Demography, Geography, Planning and Development
- Link zum Portal
- https://ucris.univie.ac.at/portal/de/publications/the-nexus-between-contract-duration-and-the-use-of-formal-and-informal-incentive-pay(ae116bde-20fa-4c1d-a479-97637ac156a1).html