nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒04‒25
28 papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Biased Supervision By Josse Delfgaauw; Michiel Souverijn
  2. Optimal Taxation with Risky Human Capital By Marek Kapicka; Julian Neira
  3. Knowing that You Matter, Matters! The Interplay of Meaning, Monetary Incentives, and Worker Recognition By Michael Kosfeld; Susanne Neckermann; Xiaolan Yang
  4. Task-specific Human Capital and Organizational Inertia By Josse Delfgaauw; Otto H. Swank
  5. Social Relations, Incentives, and Gender in the Workplace By Okemena Onemu
  6. Ability Dispersion and Team Performance By Sander Hoogendoorn; Simon C. Parker; Mirjam van Praag
  7. Does Relative Grading help Male Students? Evidence from a Field Experiment in the Classroom By Eszter Czibor; Sander Onderstal; Randolph Sloof; Mirjam van Praag
  8. Performance Pay and Productivity: The Moderating Role of a High-Wage Policy By Uwe Jirjahn
  9. Leniency Bias in Long-Term Workplace Relationships By Jan Tichem
  10. Performance and Relative Incentive Pay: The Role of Social Preferences By Pablo Hernandez; Dylan B. Minor; Dana Sisak
  11. Peers at Work: From the Field to the Lab By Roel van Veldhuizen; Hessel Oosterbeek; Joep Sonnemans
  12. Strong intrinsic motivation By Dessi, Roberta; Ristichini, Aldo
  13. Testing for Distortions in Performance Measures: An Application to Residual Income Based Measures like Economic Value Added By Randolph Sloof; Mirjam van Praag
  14. Are CEOs incentivized to avoid Corporate Taxes? - Empirical Evidence on Managerial Bonus Contracts By Heiner Schmittdiel
  15. A Field Experiment in Motivating Employee Ideas By Susanne Neckermann; Michael Gibbs; Christoph Siemroth
  16. The Importance of Being in Control of Business: Work Satisfaction of Employers, Own-account Workers and Employees By Jolanda Hessels; José María Millán; Concepción Román
  17. Paid to quit By Robert Dur; Heiner Schmittdiel
  18. Allocation of Human Capital and Innovation at the Frontier: Firm-level Evidence on Germany and the Netherlands By Eric Bartelsman; Sabien Dobbelaere; Bettina Peters
  19. The Impact of Matching Mission Preferences on Well-being at Work By Robin Zoutenbier
  20. Endogenous Effort Norms in Hierarchical Firms By Jan Tichem
  21. A Theory of Education and Health By Titus J. Galama; Hans van Kippersluis
  22. Human capital, innovation and the distribution of firm growth rates By Goedhuys-Degelin M.D.L.; Sleuwaegen L.
  23. Differential Delivery Dates, Retrievability and the Incentives Compatibility of Contracts By Raul V. Fabella
  24. The Impact of Gender Diversity on the Performance of Business Teams: Evidence from a Field Experiment By Sander Hoogendoorn; Hessel Oosterbeek; Mirjam van Praag
  25. The Flipside of Comparative Payment Schemes By Thomas Buser; Anna Dreber
  26. Ethnic Diversity and Team Performance: A Field Experiment By Sander Hoogendoorn; Mirjam van Praag
  27. Parental human capital and effective school management : evidence from The Gambia By Blimpo,Moussa P.; Evans,David; Lahire,Nathalie
  28. Individual Team Productivity - A Conceptual Approach By Julia Müller; Thorsten Upmann; Joachim Prinz

  1. By: Josse Delfgaauw (Erasmus University Rotterdam); Michiel Souverijn (Erasmus University Rotterdam, the Netherlands)
    Abstract: When verifiable performance measures are imperfect, organizations often resort to subjective performance pay. This may give supervisors the power to direct employees towards tasks that mainly benefit the supervisor rather than the organization. We cast a principal-supervisor-agent model in a multitask setting, where the supervisor has an intrinsic preference towards specific tasks. We show that subjective performance pay based on evaluation by a biased supervisor has the same distorting effect on the agent's effort allocation as incentive pay based on an incongruent performance measure. If the principal can combine incongruent performance measures with biased supervision, the distortion in the agent's efforts is mitigated, but cannot always be eliminated. We apply our results to the choice between specialist and generalist middle managers, where a trade-off between expertise and bias may arise.
    Keywords: subjective performance evaluation, middle managers, incentives, multitasking
    JEL: J24 M12 M52
    Date: 2014–08–25
  2. By: Marek Kapicka (U.C. Santa Barbara and CERGE-EI); Julian Neira (Department of Economics, University of Exeter)
    Abstract: We study optimal tax policies in a life-cycle economy with risky human capital and permanent ability differences, where both ability and learning effort are private information of the agents. The optimal policies balance several goals: redistribution across agents, insurance against human capital shocks, incentives to accumulate human capital, and incentives to work. We show that, in the optimum, i) high-ability agents face risky consumption in order to elicit learning effort while low-ability agents are insured, ii) high-ability agents face a higher savings tax to discourage them from self-insuring, iii) under certain conditions, the inverse marginal labor income tax rate follows a random walk, and iv) the “no distortion at the top” result does not apply if discouraging labor supply increases incentives to invest in human capital. Quantitatively, we find large welfare gains for the U.S. from switching to an optimal tax system.
    Keywords: optimal taxation, income taxation, human capital
    JEL: E6 H2
    Date: 2015
  3. By: Michael Kosfeld (Goethe University Frankfurt , Germany); Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, ZEW, Germany); Xiaolan Yang (Zhejiang University, Hangzhou , P R China)
    Abstract: We manipulate workers' perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect of monetary incentives and of worker recognition via symbolic awards. We also look at interaction effects. While meaning outperforms monetary incentives, the latter have a robust positive effect on performance that is independent of meaning. In contrast, meaning and recognition have largely similar effects but interact negatively. Our results are in line with image-reward theory (Benabou and Tirole 2006) and suggest that meaning and worker recognition operate via the same channel, namely image seeking.
    Keywords: Meaning, monetary incentives, worker recognition, field experiment
    JEL: C93 J33 M12 M52
    Date: 2014–04–01
  4. By: Josse Delfgaauw (Erasmus University Rotterdam); Otto H. Swank (Erasmus University Rotterdam)
    Abstract: Employees' incentive to invest in their task proficiency depends on the likelihood that they will execute the same tasks in the future. Changes in tasks can be warranted as a result of technological progress and changes in firm strategy as well as from fine-tuning job design and from monitoring individuals' performance. However, the possibility of a change in tasks reduces employees' incentive to invest in task-specific skills. We develop a simple two-period principal-agent model showing that some degree of inertia benefits the principal. We then analyze how organizations can optimally combine several policies to approach the optimal degree of inertia. In particular, we consider the optimal mixture of (abstaining from) exploration, managerial vision, organizational task-specific investments, and incentive pay. Our analysis yields testable predictions concerning the relations between these organizational policies.
    Keywords: Task-specific human capital, organizational inertia, time-inconsistency, exploration, exploitation
    JEL: D23 D83 D92
    Date: 2014–03–13
  5. By: Okemena Onemu (Erasmus University Rotterdam)
    Abstract: Gender differences in preferences regarding social relationships and competitive environments are well documented in psychology and economics. Research also shows that social relationships and competition among co-workers are affected by the incentive schemes workers are exposed to. We combine these two stylized facts and hypothesize that men and women differ in how they rate their co-worker relationships when they work under individual incentives, group incentives, or a combination of the two. This hypothesis is explored using survey data on 14,743 highly educated employees from 78 different organizations in the Netherlands. We find correlational evidence that, in the absence of individual incentives, group incentives improve co-worker relationships for women, but deteriorate co-worker relationships for men.
    Keywords: Incentives, gender differences, interpersonal relations, social interaction
    JEL: J3 M52
    Date: 2014–01–13
  6. By: Sander Hoogendoorn (CPB Netherlands Bureau for Economic Policy Analysis, the Netherlands); Simon C. Parker (Ivey Business School, Western University, London, Canada); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team’s performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real companies under identical circumstances. We ensured exogenous variation in — otherwise random — team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output.
    Keywords: Ability dispersion, team performance, field experiment, entrepreneurship
    JEL: C93 D83 J24 L25 L26 M13 M54
    Date: 2014–05–06
  7. By: Eszter Czibor (University of Amsterdam); Sander Onderstal (University of Amsterdam); Randolph Sloof (University of Amsterdam); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: The provision of non-pecuniary incentives in education is a topic that has received much scholarly attention lately. Our paper contributes to this discussion by investigating the effectiveness of grade incentives in increasing student performance. We perform a direct comparison of the two most commonly used grading practices: the absolute (i.e., criterion-referenced) and the relative (i.e., norm-referenced) grading schemes in a large-scale field experiment at a university. We hypothesize that relative grading, by creating a rank-order tournament in the classroom, provides stronger incentives for male students than absolute grading. In the full sample, we find weak support for our hypothesis. Among the more motivated students we find evidence that men indeed score significantly higher on the test when graded on a curve. Female students, irrespective of their motivation, do not increase their scores under relative grading. Since women slightly outperform men under absolute grading, grading on a curve actually narrows the gender gap in performance.
    Keywords: Education, Test performance, Grade incentives, Competition, Gender, Field experiment
    JEL: I21 I23 A22 D03 C93
    Date: 2014–08–28
  8. By: Uwe Jirjahn
    Abstract: Using panel data from German establishments, this study finds that performance pay is associated with increased productivity only when it is coupled with a high-wage policy. This holds for individual-based performance pay, group-based performance pay and profit sharing.
    Keywords: Performance pay, high-wage policy, productivity, fixed effects regressions
    JEL: D20 J33 M52
    Date: 2015
  9. By: Jan Tichem (Erasmus University Rotterdam)
    Abstract: This paper studies how firms can efficiently incentivize supervisors to truthfully report employee performance. To this end, I develop a dynamic principal-supervisor-agent model. The supervisor is either selfish or altruistic towards the agent, which is observable to the agent but not to the principal. The analysis yields two key results. First, supervisor altruism sometimes provides a net incentive to report performance truthfully, rather than to bias evaluations upward. The intuition is that an altruistic supervisor values his job because of his good relationship with the agent, and puts his job at risk by overrating the agent's performance. Second, I show that by screening for one supervisor type, firms can incentivize the supervisor to truthfully report performance at the lowest possible costs. For this reason, screening may be optimal, even though it reduces the probability that vacancies are filled.
    Keywords: Altruism, incentives, leniency bias, screening, subjective performance evaluation, supervisor
    JEL: D86 J33 M52 M55
    Date: 2013–12–12
  10. By: Pablo Hernandez (New York University Abu Dhabi); Dylan B. Minor (Northwestern University, United States of America); Dana Sisak (Erasmus University Rotterdam)
    Abstract: Under relative performance pay, other-regarding workers internalize the negative externality they impose on other workers. In one form -increased own effort reduces others' payoffs- this results in other-regarding individuals depressing efforts. In another form punishment reduces the payoff of other workers- groups with other-regarding individuals feature higher efforts because it is more difficult for these individuals to sustain low-effort (collusive) outcomes. We explore these effects experimentally and find other-regarding workers tend to depress efforts by 15% on average. However, selfish workers are nearly three times more likely to lead workers to coordinate on minimal efforts when communication is possible. Hence, the social preferences composition of a team of workers has nuanced consequences on efforts.
    Keywords: Social Preferences, Relative Performance, Collusion, Leadership
    JEL: D03 M50 J30
    Date: 2013–10–24
  11. By: Roel van Veldhuizen (WZB Berlin Social Science Center); Hessel Oosterbeek (Universiteit van Amsterdam); Joep Sonnemans (Universiteit van Amsterdam)
    Abstract: In an influential study, Mas and Moretti (2009) find that “worker effort is positively related to the productivity of workers who see him, but not workers who do not see him”. They interpret this as evidence that social pressure can reduce free riding. In this paper we report an attempt to reproduce the findings of Mas and Moretti in a lab experiment. Lab experiments have the advantage that they can shut down alternative channels through which workers can influence the productivity of colleagues whom they observe. Although the subjects in our experiment are aware of the productivity of others and although there is sufficient scope for subjects to vary their productivity, we find no evidence of the type of peer effects reported by Mas and Moretti. This suggests that their findings are less generalizable than has been assumed.
    Keywords: peer effects, experiment, laboratory experiment
    JEL: C91 J24
    Date: 2014–04–29
  12. By: Dessi, Roberta; Ristichini, Aldo
    Abstract: A large literature in psychology, and more recently in economics, has argued that monetary rewards can reduce intrinsic motivation. We investigate whether the negative impact persists when intrinsic motivation is strong, and test this hypothesis experimentally focusing on the motivation to undertake interesting and challenging tasks, informative about individual ability. We find that this type of task can generate strong intrinsic motivation, that is impervious to the effect of monetary incentives, particularly when the individual is "racing against himself". In our experiments, monetary incentives have no significant impact on performance. In a second experiment using the same kind of task but a setting designed to weaken intrinsic motivation, monetary incentives do have a significant, positive, effect on performance. This result confirms that our experimental setup may, with appropriate conditions, replicate the known crowding out effects.
    Date: 2015–04
  13. By: Randolph Sloof (University of Amsterdam); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: This discussion paper resulted in a publication in the 'Journal of Economics and Management Strategy', forthcoming.<P> Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to be dysfunctional (gaming). This paper applies the empirical test developed by Courty and Marschke (2008) to detect whether the widely used class of Residual Income based performance measures —such as Economic Value Added (EVA)— is distorted, leading to unintended agent behavior. The paper uses a difference-in-differences approach to account for changes in economic circumstances and the self-selection of firms using EVA. Our findings indicate that EVA is a distorted performance measure that elicits the gaming response.<P> Submitted to the 'Journal of Economics and Management Strategy'.
    Keywords: Residual Income, Economic Value Added, distortion, performance measurement, incentive compensation
    JEL: D21 G35 J33 L21 M12 M40 M52
    Date: 2014–05–09
  14. By: Heiner Schmittdiel (Erasmus University Rotterdam)
    Abstract: In this paper, we test empirically whether there is a relationship between corporate income taxes and CEO bonus payments. Using Compustat and ExecuComp data from 1992 to 2010, we find mixed results. Looking at the whole sample, the average bonus contract rewards tax savings excessively in comparison to other determinants of corporate net income. A possible explanation is that managers require to be compensated for the additional risk inherent in running an aggressive tax strategy. In accordance with previous literature, we document a substantial heterogeneity in compensation practices across industries. It appears that our main result is driven by firms in the Industrial and Retail sectors. We further find that companies with greater tax planning opportunities, for example by virtue of size or operations abroad, are more likely to condition the CEO’s bonus on corporate income taxes.
    Keywords: CEO incentives, executive compensation, tax avoidance
    JEL: H25 H26 M41 M52
    Date: 2014–04–25
  15. By: Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, and ZEW, Germany); Michael Gibbs (University of Chicago, United States, and IZA, Germany); Christoph Siemroth (University of Mannheim, Germany)
    Abstract: We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.
    Keywords: innovation, rewards, creativity, field experiment
    JEL: C93 J24 M52 O32
    Date: 2014–04–08
  16. By: Jolanda Hessels (Erasmus School of Economics, Erasmus Happiness Economics Research Organization (EHERO), Erasmus University Rotterdam, The Netherlands); José María Millán (University of Huelva, Spain); Concepción Román (University of Huelva, Spain)
    Abstract: Self-employed workers can be own-account workers who control their own work or employers who not only are their own boss but also direct others (their employees). We expect both types of self-employed, i.e., own-account workers and employers, to enjoy more independence in determining their work content (type of work) and more flexibility in shaping their work context (e.g., working conditions) compared to paid employees and hence to be more satisfied with their work. Furthermore, we suspect that employers (who can delegate work to their employees and can help them to develop and grow) enjoy even higher levels of work satisfaction compared to both own-account workers (who are their own boss but do not give direction to others) and (non-supervisory) paid employees (who have to obey orders from others within organizational hierarchies). While prior studies typically broadly compare the work satisfaction of self-employed and paid employees, we distinguish employers from own-account workers within the group of self-employed using data from the ECHP for 14 European countries. Our findings indeed show that employers are significantly more satisfied with their work than both own-account workers and paid employees. Additionally, while employers as well as own-account workers enjoy greater procedural utility than (non-supervisory) paid employees stemming from the content and the context of their work, there also seems to be an additional work satisfaction premium for employers.
    Keywords: entrepreneurship; self-employment; employers; own-account workers; work satisfaction
    JEL: J24 J28 L26 O52
    Date: 2015–04–14
  17. By: Robert Dur (Erasmus University Rotterdam); Heiner Schmittdiel (Erasmus University Rotterdam)
    Abstract: Inspired by a recent observation about an online retail company, this paper explains why a firm may find it optimal to offer an exit bonus to recent hires so as to induce self-selection. We study a double adverse selection problem, in which the principal can neither observe agents’ commitment to the job nor their intrinsic motivation. A steep wage-tenure profile deters uncommitted agents from applying. An exit bonus can stimulate that –among the committed agents– those who discovered that they are not intrinsically motivated for the job discontinue employment with the principal. Our key findings are that offering an exit bonus increases profits when the first adverse selection problem is sufficiently severe compared to the second and that the exit bonus needs to come as a surprise for the agents in order to function well.
    Keywords: intrinsic motivation, commitment, self-selection, wage compensation, exit bonus, transparency
    JEL: J31 J33 M52 M55
    Date: 2013–10–22
  18. By: Eric Bartelsman (VU University Amsterdam, The Netherlands, and IZA, Germany); Sabien Dobbelaere (VU University Amsterdam, The Netherlands, and IZA, Germany); Bettina Peters (Centre for European Economic Research (ZEW), MaCCI Mannheimer Centre for Competition and Innovation, Germany, and University of Zurich, Switzerland)
    Abstract: This paper examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. Except for low-technology manufacturing, average innovation performance is higher in all industries in Germany and the innovation performance distributions are more dispersed in the Netherlands. In both countries, we observe non-linearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to pro duct innovation whereas the most negative returns to process innovation are observed in the best-performing enterprises of most industries. In both countries, we find that the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence for the latter points to a winner-takes-all interpretation of this finding.
    Keywords: Human capital, innovation, productivity, quantile regression
    JEL: C10 I20 O14 O30
    Date: 2013–07–19
  19. By: Robin Zoutenbier (Erasmus University Rotterdam)
    Abstract: A recent literature in economics assumes that workers differ in their mission preferences. These studies predict a premium on the matching of mission preferences between a worker and employer. This paper uses data from the Dutch LISS panel to examine this prediction for government workers. Results show that government workers whose political preferences match those of the political parties in office are more satisfied with the type of work they do as compared to government workers whose political preferences do not match. A match of political preferences has no effect on the job satisfaction of workers outside the government sector.
    Keywords: job satisfaction, mission motivation, public sector, bureaucrats
    JEL: H1 J45 M5
    Date: 2014–03–17
  20. By: Jan Tichem (Erasmus University Rotterdam)
    Abstract: This paper studies how a three-layer hierarchical firm (principal-supervisor-agent) optimally creates effort norms for its employees. The key assumption is that effort norms are affected by the example of superiors. In equilibrium, norms are eroded as one moves down the hierarchy. The reason is that, because exerting effort is costly, the supervisor only partially complies with the principal's example, and thereby transmits a lower norm to the agent. The principal optimally responds to norm erosion by setting a higher example to begin with. In equilibrium, norm erosion gives rise to three inefficiencies: the principal works too hard, the supervisor's norm is too high, and the agent's norm is too low. To reduce these inefficiencies, firms should keep the extent of hierarchy to a minimum, promote employees with the strongest sensitivity to social norms, and distort man agerial spans of control.
    Keywords: delayering, hierarchy, leading by example, norms, promotion, span of control
    JEL: D23 M50 M51
    Date: 2013–12–12
  21. By: Titus J. Galama (University of Southern California, and RAND Corporation, United States); Hans van Kippersluis (Erasmus School of Economics, Erasmus University Rotterdam, the Netherlands)
    Abstract: This paper presents a unified theory of human capital with both health capital and, what we term, skill capital endogenously determined within the model. By considering joint investment in health capital and in skill capital, the model highlights similarities and differences in these two important components of human capital. Health is distinct from skill: health is important to longevity, provides direct utility, provides time that can be devoted to work or other uses, is valued later in life, and eventually declines, no matter how much one invests in it (a dismal fact of life). Lifetime earnings are strongly multiplicative in skill and health, so that investment in skill capital raises the return to investment in health capital, and vice versa. The theory provides a conceptual framework for empirical and theoretical studies aimed at understanding the complex relati onship between education and health, and generates several new testable predictions.
    Keywords: health investment, lifecycle model, human capital, health capital
    JEL: D91 I10 I12 J00 J24
    Date: 2015–03–05
  22. By: Goedhuys-Degelin M.D.L.; Sleuwaegen L. (UNU-MERIT)
    Abstract: This paper focuses on the occurrence of high-growth firms in relation to human capital and innovation. High-growth firms are rather exceptional and temporary phenomena and occur in the upper tail of the conditional firm growth distribution. Using quantile regression we study how human capital and RD affect the probability that high-growth firms occur. The results show that both human capital and RD increase the likelihood that a firm is a high-growth firm. Human capital appears to be positive and growth enhancing over the entire conditional growth distribution, hence also in the lower quantiles, where it reduces the likelihood of low growth. By contrast, RD increases not only the likelihood of high-growth firms, but also the likelihood of low-growth firms and exits, underscoring the risky nature of innovation. A probit analysis for high-growth firms and low-growth firms provides corroborating evidence for this finding. From a policy perspective the results suggest the use of more integrated policies, not only focusing on stimulating RD but also on the quality of human capital to foster the development of high-growth firms.
    Keywords: Firm Performance: Size, Diversification, and Scope; Management of Technological Innovation and R&D;
    JEL: L25 O32
    Date: 2015
  23. By: Raul V. Fabella (School of Economics, University of the Philippines Diliman)
    Abstract: Differential delivery dates (D3) of contract obligations characterize most contracts in real life. D3 puts the contractor who delivers last, in the words of David Hume (1769), in “a position of advantage” because reneging on his/her obligation can be profitable. Ex-ante remedies such as Coase’s “ownership”, Williamson’s “hostage”, Klein et al’s “vertical ownership”, Grossman and Hart’s “assignment of residual rights”, etc have been proposed. The principal’s decision to appropriate the quasi-rent generated by the agent delivering effort first under possibly weak public ordering and non-zero retrievability of delivered effort is explicitly modeled. We give the sufficient conditions for the preservation of the incentives compatibility of the simple P-A effort-in-advance contract in the D3 environment.
    Keywords: incentives compatibility, quasi-rent appropriation, retrievability, incentives contract
    JEL: D52 D86
    Date: 2015–04
  24. By: Sander Hoogendoorn (University of Amsterdam); Hessel Oosterbeek (University of Amsterdam); Mirjam van Praag (University of Amsterdam)
    Abstract: This discussion paper resulted in an article in <I>Management Science</I>. Volume 59 issue 7, pages 1514-1528.<P> This paper reports on a field experiment conducted to estimate the impact of the share of women in business teams on their performance. Teams consisting of undergraduate students in business studies start up a venture as part of their curriculum. We manipulated the gender composition of teams and assigned students randomly to teams, conditional on their gender. We find that teams with an equal gender mix perform better than male-dominated teams in terms of sales and profits. We explore various mechanisms suggested in the literature to explain this positive effect of gender diversity on performance (including complementarities, learning, monitoring, and conflicts) but find no support for them. The paper was accepted for publication in <I>Management Science</>.
    Keywords: Gender diversity, team performance, entrepreneurship, field experiment, entrepreneurship education, board effectiveness
    JEL: J16 L25 L26 M13 C93
    Date: 2011–04–11
  25. By: Thomas Buser (University of Amsterdam); Anna Dreber (Stockholm School of Economics, Sweden)
    Abstract: Comparative payment schemes and tournament-style promotion mechanisms are ubiquitous in the work place. We test experimentally whether they have a negative impact on the willingness to cooperate. Participants first perform in a simple task and then participate in a public goods game. The payment scheme for the task varies across treatment groups. Compared to a piece-rate scheme, individuals in a winner-takes-all competition are significantly less cooperative in the public goods game. A lottery treatment, where the winner is decided by luck, has the same effect. In a competition treatment with feedback, winners cooperate as little as participants in the other treatments, whereas losers cooperate even less. All three treatments lead to substantial losses in the realised social surplus from the public good while having no significant impact on performance. The public go ods game is payoff-independent and is played with a separate set of others; we therefore estimate a psychological effect of comparative pay on the willingness to cooperate.
    Keywords: comparative pay; competition; cooperation; gender differences; incentive schemes
    JEL: D03 D23 J16 J33
    Date: 2013–11–28
  26. By: Sander Hoogendoorn (University of Amsterdam); Mirjam van Praag (University of Amsterdam)
    Abstract: One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the impact of ethnic diversity on the performance of business teams using a field experiment. We follow 550 students who set up 45 real companies as part of their curriculum in an international business program in the Netherlands. We exploit the fact that companies are set up in realistic though similar circumstances and that we, as outside researchers, had the unique opportunity to exogenously vary the ethnic composition of otherwise randomly composed teams. The student population consists of 55% students with a non-Dutch ethnicity from 53 different countries of origin, enabling us to include extremely diverse teams in our study. We find that a moderate level of ethnic diversity has no effect on team performance in terms of business outcomes (sales, prots and prots per share). However, if at least the majority of team members is ethnically diverse then more ethnic diversity seems to affect the performance of teams positively. Our data suggest that this positive effect might be related to the more diverse pool of relevant knowledge facilitating (mutual) learning within ethnically diverse teams.
    Keywords: Ethnic diversity, team performance, field experiment, entrepreneurship, (mutual) learning
    JEL: J15 L25 C93 L26 M13 D83
    Date: 2012–07–13
  27. By: Blimpo,Moussa P.; Evans,David; Lahire,Nathalie
    Abstract: Education systems in developing countries are often centrally managed in a top-down structure. In environments where schools have different needs and where localized information plays an important role, empowerment of the local community may be attractive, but low levels of human capital at the local level may offset gains from local information. This paper reports the results of a four-year, large-scale experiment that provided a grant and comprehensive school management training to principals, teachers, and community representatives in a set of schools. To separate the effect of the training from the grant, a second set of schools received the grant only with no training. A third set of schools served as a control group and received neither intervention. Each of 273 Gambian primary schools were randomized to one of the three groups. The program was implemented through the government education system. Three to four years into the program, the full intervention led to a 21 percent reduction in student absenteeism and a 23 percent reduction in teacher absenteeism, but produced no impact on student test scores. The effect of the full program on learning outcomes is strongly mediated by baseline local capacity, as measured by adult literacy. This result suggests that, in villages with high literacy, the program may yield gains on students'learning outcomes. Receiving the grant alone had no impact on either test scores or student participation.
    Keywords: Primary Education,Education For All,Secondary Education,Tertiary Education,Effective Schools and Teachers
    Date: 2015–04–13
  28. By: Julia Müller (Erasmus University Rotterdam); Thorsten Upmann (University Duisburg-Essen, Germany); Joachim Prinz (University Duisburg-Essen, Germany)
    Abstract: Teams, in both firms and in sports, jointly produce a product. While a fixed task is assigned to each member of a team, the individual team productivity of a worker or player is difficult to conceptualize. This is particularly true, if this concept is aimed to be operable on observable data. In this paper we, therefore, propose two versions of a new concept of individual team productivity which is closely related to eigenvalue centrality; accordingly we refer to it as eigenvalue productivity. For each version of eigenvalue productivity we provide an example demonstrating the operability of our concept.
    Keywords: individual team productivity, eigenvalue productivity, centrality, team production, team sports
    JEL: D24 J24 L23 L83
    Date: 2013–11–11

This nep-hrm issue is ©2015 by Tommaso Reggiani. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.