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| Author: | Fehr, E. Schmidt, K.M. |
| Title: | Fairness and incentives in a multi-task principal-agent model |
| Journal: | Scandinavian Journal of Economics
2004 : VOL. 106:3, p. 453-474 |
| Index terms: | Incentives Moral hazard |
| Freeterms: | Fairness Multiple tasks |
| Language: | eng |
| Abstract: | This article reports on a two-task principal-agent experiment in which only one task is contractible. The principal can either offer a piece-rate contract or a (voluntary) bonus to the agent. Many principlas reward high effort on both tasks with substantial bonuses. Agents anticipate this and provide high effort on both tasks. In contrast, almost all agents with a piece-rate contract focus on the first task and disregard the second. Principals understand this and predominantly offer bonus contracts. This behaviour contradicts the self-interest theory but is consistent with theories of fairness. |
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