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on Contract Theory and Applications |
| By: | Julianna M. Butler (Department of Economics, University of Delaware); Scott M. Gilpatric (Department of Economics, University of Tennessee); Christian A. Vossler (Department of Economics, University of Tennessee) |
| Abstract: | We show how competition for status that conveys explicit benefits can motivate effort in organizations such as schools, public agencies, and unionized firms in the absence of monetary incentives or intrinsically motivated workers. We develop an indefinitely-repeated labor market tournament model in which high-status agents may be rewarded either monetarily or with favorable task assignment. If monetary incentives are unavailable and the principal relies on task assignment this entails an efficiency cost relative to the benchmark case with monetary incentives. Our model offers a new perspective on the value to an employer of flexibility over job assignments within labor contracts. |
| Keywords: | task assignment; status; dynamic tournament; non-wage compensation |
| JEL: | C73 J41 L20 M51 M52 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ten:wpaper:2017-03&r=cta |
| By: | Boon, Ling-Ni (Tilburg University, School of Economics and Management) |
| Abstract: | This dissertation examines three stakeholders in pension finance: the individual, the policymaker, and the pension provider (e.g., an insurer or a pension fund). In a setting beset by unforeseen financial market circumstances and demographic changes that disfavor financial security in retirement, a re-evaluation of these stakeholders' role is necessary. We explore the regulation and design of retirement plans by incorporating features that characterize the future retirement landscape, such as the increasing burden of risk borne by the individual, and the potential involvement of market investors in the provision of retirement contracts. The implications of our findings encompass guidance for individuals in managing longevity risk, evaluation of the appeal of longevity risk exposure to investors, insights on contract design for the pension provider, and proposals to the policymaker on regulatory measures that foster a sustainable retirement environment. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:c1bd136e-95e4-42a1-bdb4-870771b0284e&r=cta |
| By: | Enghin Atalay; Ali Hortaçsu; Mary Jialin Li; Chad Syverson |
| Abstract: | We examine the within- and across-firm shipment decisions of tens of thousands of goods-producing and distributing establishments. This allows us to quantify the normally unobservable forces that determine firm boundaries; which transactions are mediated by ownership control, as opposed to contracts or markets. We find firm boundaries to be an economically significant barrier to trade: having an additional vertically integrated establishment in a given destination zip code has the same effect on shipment volumes as a 40 percent reduction in distance. We then calibrate a multisector trade model to quantify the economy-wide implications of transacting across vs. within firm boundaries. |
| JEL: | D2 F14 L2 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23777&r=cta |
| By: | Sarkisian, Roberto |
| Abstract: | This paper studies incentives provision when agents are characterized either by homo moralis preferences (Alger and Weibull, 2013, 2016), i.e. their utility is represented by a convex combination of selfish preferences and Kantian morality, or by altruism. In a moral hazard in teams setting with two agents whose efforts affect output stochastically, I demonstrate that the power of extrinsic incentives decreases with the degrees of morality and altruism displayed by the agents, thus leading to increased profits for the principal. I also show that a team of moral agents will only be preferred if the production technology exhibits decreasing returns to efforts, the probability of a high realization of output conditional on both agents exerting effort is suficiently high and either the outside option for the agents is zero or the degree of morality is suficiently low. |
| Keywords: | Moral hazard in teams; optimal contracts; homo moralis preferences;altruism |
| JEL: | D03 D82 D86 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:31966&r=cta |