nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒10‒23
eleven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Oliver Hart and Bengt Holmström: Contract Theory By Committee, Nobel Prize
  2. Free-Riding and Knowledge Spillovers in Teams: The Role of Social Ties By De Paola, Maria; Gioia, Francesca; Scoppa, Vincenzo
  3. Goal Setting in the Principal-Agent Model: Weak Incentives for Strong Performance By Brice Corgnet; Joaquín Gómez-Miñambres; Roberto Hernán-Gonzalez
  4. Financial incentives and academic performance: An experimental study By Noemí Herranz-Zarzoso; Gerardo Sabater-Grande
  5. Dancing with the Stars: Interactions and Human Capital Accumulation By Valerio Sterzi; Stefanie Stantcheva; Santiago Caicedo; Ernest Miguelez; Ufuk Akcigit
  6. Seeking risk or answering smart? Framing in elementary schools By Wagner, Valentin
  7. Brazil : case study on working time organization and its effects in the health services sector By Matos de Oliveira, Ana Luíza.
  8. Salience, Selective Attention and Learning with Information-Overload By Inga Jonaityte
  9. Financial Incentives to Work: Comparing Ireland and the UK By Callan, Tim; O'Dea, Cormac; Roantree, Barra; Savage, Michael
  10. Managing the Workload: an Experiment on Individual Decision Making and Performance By V. Rattini
  11. Repeated moral hazard with costly self-control By Lukasz Wozny

  1. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: An eternal obstacle to human cooperation is that people have di§erent interests. In modern societies, conflicts of interests are often mitigated -- if not completely resolved -- by contractual arrangements. Well-designed contracts provide incentives for the contracting parties to exploit the prospective gains from cooperation. For example, labor contracts include pay and promotion conditions that are designed to retain and motivate employees; insurance contracts combine the sharing of risk with deductibles and co-payments to encourage clients to exercise caution; credit contracts specify payments and decision rights aimed at protecting the lender, while encouraging sound decisions by borrowers.
    Keywords: Contract theory;
    JEL: D86
    Date: 2016–10–10
  2. By: De Paola, Maria (University of Calabria); Gioia, Francesca (University of Edinburgh); Scoppa, Vincenzo (University of Calabria)
    Abstract: We investigate whether and how social ties affect performance in teams by implementing a field experiment in which a sample of undergraduate students are randomly assigned to either teams composed by friends or teams composed by individuals not linked by friendship relationships. Students undertake an intermediate exam divided into two parts: one graded on the basis of individual performance and the other graded on the basis of the team performance. We find that students assigned to socially connected teams perform significantly better than control students in both the team part and the individual part of the exam, suggesting that social ties are relevant both for solving free-riding problems and for inducing knowledge spillovers among teammates. The positive effect of friendship persists over time: treated students obtain better grades also in a second individual test after the conclusion of the experiment.
    Keywords: team, free-riding, knowledge spillover, social ties, randomized field experiment
    JEL: J33 J24 D82 D86 L14 C93
    Date: 2016–10
  3. By: Brice Corgnet (EMLYON Business school - EMLYON Business School, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Joaquín Gómez-Miñambres (Chapman University - Chapman University, Bucknell University); Roberto Hernán-Gonzalez (Nottingham University Business School - UON - University of Nottingham, UK)
    Abstract: We study a principal-agent framework in which principals can assign wage-irrelevant goals to agents. We find evidence that, when given the possibility to set wage-irrelevant goals, principals select incentive contracts for which pay is less responsive to agents' performance. We show that average performance of agents is higher in the presence of goal setting than in its absence despite weaker incentives. We develop a principal-agent model with reference-dependent utility that illustrates how labor contracts combining weak monetary incentives and wage-irrelevant goals can be optimal. It follows that recognizing the pervasive use of non-monetary incentives in the workplace may help account for previous empirical findings suggesting that firms rely on unexpectedly weak monetary incentives.
    Keywords: Principal-agent models, incentive theory, non-monetary incentives, goal setting, reference-dependent utility, laboratory experiments
    Date: 2016
  4. By: Noemí Herranz-Zarzoso (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: This paper analyzes the effect of financial incentives on academic performance by means of a randomized field experiment. Using two alternative payment mechanisms we implement two experimental treatments designed to motivate students depending on their absolute or relative academic performance. Subjects, recruited among students from Microeconomics, were split in two groups depending on whether they had a failed background in the aforementioned subject (returning students) or not (new students). New students were informed that they would receive a reward depending on their bet (the grade they thought would achieve) and the real grade obtained. In the case of the returning students, the reward was calculated taking into account the bet, the obtained real grade and their improvement with respect to previous semesters. In the first treatment students were rewarded according to a piece rate system whereas in the second one we established two rankings (one for new students and another one for returning students) classifying them depending on their academic performance. In both treatments we find that the implemented incentives are effective to increase the average of grades for both types of students (new and returning), but the piece rate mechanism is more powerful to motivate a higher number of students.
    Keywords: Betting for grades, incentives, academic performance, piece rate mechanism, rank-order tournament
    JEL: C93 D03 I21 J24
    Date: 2016
  5. By: Valerio Sterzi (Université de Bordeaux); Stefanie Stantcheva (Harvard University); Santiago Caicedo (University of Chicago); Ernest Miguelez (Université de Bordeaux); Ufuk Akcigit (University of Chicago)
    Abstract: Does interacting with others contribute to human capital accumulation? We try to answer this question by using a novel panel dataset on European inventors matched to their employers. Our panel data comes from the European Patent Offices since the 1980s and contains information on inventors, their employers, and their patents. More interactions are very strongly correlated with higher subsequent productivities of inventors, as measured by their number and quality of patents. Using variation in labor market regulations and flexibility across sectors, countries and time as instruments, we document a causal link between interactions and productivity or human capital accumulation of inventors.
    Date: 2016
  6. By: Wagner, Valentin
    Abstract: This paper investigates how framing manipulations affect the quantity and quality of decisions. In a field experiment in elementary schools, 1.377 pupils are randomly assigned to one of three conditions in a multiple-choice test: (i) gain frame (Control), (ii) loss frame (Loss) and (iii) gain frame with a downward shift of the point scale (Negative). On average, pupils in both treatment groups answer significantly more questions correctly compared to the "traditional grading". This increase is driven by two different mechanisms. While pupils in the Loss Treatment increase significantly the quantity of answered questions - seek more risk - pupils in the Negative Treatment seem to increase the quality of answers - answer more accurately. Moreover, differentiating pupils by their initial ability shows that a downward shift of the point scale is superior to loss framing. High-performers increase performance in both treatment groups but motivation is significantly crowded out for low-performers only in the Loss Treatment.
    Keywords: behavioral decision making,quantity and quality of decisions,framing,loss aversion,field experiment,motivation,education
    JEL: D03 I20 D80 C93 M54
    Date: 2016
  7. By: Matos de Oliveira, Ana Luíza.
    Abstract: This country case study aimed at identifying existing working time arrangements and practices in the health services sector in Brazil and studying their influence on workers' wellbeing, including their work-life-balance, and organizational performance. The explorative study is based on a literature review as well as qualitative interviews with health workers, managers, policy makers, professional associations and trade unionists in the health sector in five regions of the country. It describes the Brasilian health system; the legislation and regulation regarding working time; organizational needs of health facilities, patterns of shift scheduling and mechanisms for consultation with staff. The paper also identifies key working-time related factors affecting staff morale and performance and describes staff and managerial perceptions an preferences of working time arrangements and concludes with a set of recommendations.
    Keywords: arrangement of working time, work organization, medical personnel, health service, hours of work, work life balance, case study, Brazil, aménagement du temps de travail, organisation du travail, personnel médical, service de santé, durée du travail, conciliation travail-vie personnelle, étude de cas, Brésil, ordenamiento del tiempo de trabajo, organización del trabajo, personal médico, servicio de salud, horas de trabajo, conciliación vida familiar y laboral, estudio de casos, Brasil
    Date: 2015
  8. By: Inga Jonaityte (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: A fundamental question is how firms adapt to environments that present multiple dimensions. Generally, the number of dimensions may exceed the limits of human attention. Subsequently, as organizations try to adapt to such environments they may be constrained to consider only a few dimensions. In fact, selection of dimensions is a process that may be driven by multiple factors. Especially relevant are the validity, the predictive weight of dimensions, and the perceptual salience of features through which the competing dimensions are perceived. When these aspects diverge, their conflict will affect the learning process. In this paper, we explore how salience and validity interact in the process where agents have to learn to evaluate a stream of task inputs with the number of dimensions that overloads the average short-term memory capacity. We hypothesize that the interplay between the cue salience and the validity affects the ability to assess accurately the cue-outcome relationship, detect changes in task environments, and adapt decision-making strategies accordingly. To test our hypothesis, we conducted three behavioral experiments and then proposed a classification model that accounts for the observed behavioral outcome. We consider a set of sequential binary classification decision tasks to be completed by a participant. We vary whether the difficulty of the task, also vary whether the performance of another is observable to the participants in the experiment. The behavioral data analysis highlight that cue salience is instrumental in driving learning. The simulation results illustrate that our classification model can indeed replicate the human participant data. The best fit was obtained when the single-cue salience bias was present. This suggests that humans tend to favor decision-making strategies that arise from focusing on a single, yet the most salient, cue when assessing cue-outcome relationship in multi-cue environments. Ours is perhaps the first study to demonstrate the effect of salience and validity interaction on choice and learning in multi-dimensional and changing environments in the context of organizational adaptation. Finally, we discuss variations in our linear classification model and suggest extensions of our experiment..
    Keywords: bounded rationality, learning, decision making, information processing, salience bias, complex environments, confidence, competitive incentives, experiment.
    JEL: D81 D83 C91
    Date: 2016–10
  9. By: Callan, Tim; O'Dea, Cormac; Roantree, Barra; Savage, Michael
    Date: 2016–06
  10. By: V. Rattini
    Abstract: The present research investigates individual decision making regarding jobs scheduling, by means of a laboratory experiment based on the “Admission Test” of the University of Bologna, in which students have to allocate effort among several tasks in a limited timespan. The experiment includes three treatments that differ in the way the test is administered to participants: either with a fixed sequence of questions, or with a fixed time per task, or with no constraints. Results show large and significant heterogeneity in treatment effects. Constraints on the answering sequence or on the time allocation for each task improved the performance of those subjects who failed to efficiently allocate their effort among the tasks, whereas negative effects were found for students who were already good in self-organizing. The study has relevant policy implications for the organization of the workload in the labor force, when different types of workers are employed. Furthermore, important intuitions on the design of the university student-selection mechanisms are also discussed.
    JEL: J20 C91 I20 D80 C80
    Date: 2016–10
  11. By: Lukasz Wozny
    Abstract: We consider a repeated principal-agent model, where a single agent exhibits problems of self control modelled using Gul and Pesendorfer (2001) type temptation preferences. In such a setting, for a parameterized strength of self-control, we characterize the optimal contract setting using standard Rogerson (1985) or Spear and Srivastava (1987) techniques. Our analysis identifies a new channel of principal and agents interactions that can be used to incentivize an agent, this being the reduction of its self control costs. Presence of this new channel challenges typical results obtained in models with no-temptation on the agent's side. For example, incentive compatibility constraints may be non binding at the optimal solution. Moreover the standard martingale property equating marginal cost of high (low) action today and future expected marginal payments does not hold in our case as bonus (punishment) deterrence increases the cost of self control today. The higher the parameter measuring costly self control the larger the departure from the martingale property. We also consider an impact of self control on such issues as savings or renegotiation. Few other generalization follow.
    Keywords: repeated moral hazard, self-control costs, temptation, principal-agent, optimal contract
    JEL: D86
    Date: 2016–10

This nep-hrm issue is ©2016 by Patrick Kampkötter. 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.