Compensation and heterogeneity of agents
DOI:
https://doi.org/10.18041/1900-0642/criteriolibre.2015v13n23.95Keywords:
Compensation, contracts, incentives, menu of contracts, monetary incentives, non-monetary incentivesAbstract
“Personnel Economics” has allowed us to better understand compensation schemes, the problems coming out of the principal-agent relationship, with individuals pursuing their own private interests making necessary a mechanism to promote the alignment of interests within the organization. The theory had to simplify its assumptions, particularly reducing the utility maximization principle to its monetary value. This paper considers the need to introduce the “heterogeneity” of agents for monetary and non-monetary incentives. There are problems with the limitation of knowledge and the possibility preferences may be revealed through some kind of exchange in which the principal offers a “menu of contracts”.
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References
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Stewart, G. Bennett III (1993). Rethinking Rewards. Harvard Business Review, Perspectives, noviembre-diciembre.
Torrington, D., Hall, L. & Taylor, S. (2008). Human resource management. Essex: Prentice Hall.
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Amabile; Teresa M., Beth Ann Hennessey & Barbara S. Grossman (1986). Social Influences on Creativity: The Effects of Contracted-for Reward. Journal of Personality and Social Psychology, Vol. 50, No. 1, 14-23.
Atchison, Thomas J.; David W. Belcher & David J. Thomsen (2010). Internet Based Benefits & Compensation Administration. ERI Economic Research Institute.
Baker, George G., Michael C. Jensen & Kevin J. Murphy (1988). Compensation and Incentives: Practice vs Theory. The Journal of Finance, Vol. XLIII, Nº 3.
Balafoutas, Loukas; Glenn Dutcher; Florian Lindner & Dmitry Ryvkin (2012). To reward the best or to punish the worst? A comparison of two tournament mechanisms with heterogeneous agents. Working Papers in Economics and Statistics, 2012-2008, University of Innsbruck.
Baytos, L.M. (1970). The Employee Benefit Smorgasbord: Its Potential and Limitations. Compensation Benefits Review; January, vol. 2, No. 1, 16-28.
Bénabou, R. & J. Tirole (2003). Intrinsic and Extrinsic Motivation. Review of Economic Studies, 70, Journal of Risk and Uncertainty.
Brickley, James A.; Clifford W. Smith Jr. & Jerold L. Zimmerman (1997). Managerial Economics and Organizational Architecture. (Chicago: Irwin).
Camerer, Colin F. & Robin M. Hogarth (1999). The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework. Journal of Risk and Uncertainty, Volume 19, Numbers 1-3 (1999), 7-42, 489-520.
Cartwright, Edward and Myrna Wooders (2001). On the theory of equalizing differences; Increasing abundances of types of workers may increase their earnings. Economics Bulletin, Vol. 4, No. 4; 1-10.
Deci, Edward (1972). The Effects of Contingent and Non-contingent Rewards and Controls On Intrinsic Motivation. Organizational Behavior and Human Performance 8, 217-229.
Dessi, Roberta & Aldo Rustichini (2011). Work for Image and Work for Pay. IDEI Working Paper, Nº 683, September 10.
Gneezy, U. and A. Rustichini (2000). Pay Enough or Don’t Pay at All. Quarterly Journal of Economics, 115(3), 791-810.
Gneezy, U. & John A. List (2006). Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets using Field Experiments. Econometrica, Vol. 74, No. 5 (September), 1365-1384.
Hackman, Richard J. and Greg R. Oldham (1976). Motivation through the design of work: test of a theory. Organizational Behavior and Human Performance, 16 (2), 250-279.
Hayek, Friedrich A. (1945). The Use of Knowledge in Society. American Economic Review; XXXV, No. 4, 519-30.
Heyman, James & Dan Ariely (2004). Effort for Payment: A Tale of Two Markets. Psychological Science, Vol. 15, No. 11 (Nov.), 787-793.
Herzberg, Frederick (1987). One more time: How do you motivate employees? Harvard Business Review, September-October.
Holmstrom, Bengt (1979). Moral Hazard and Observability. The Bell Journal of Economics, Vol. 10, No. 1, (Spring), 74-91.
Hübler, Dominik & Olaf Hübler (2010). The Link between Job Security and Wages: A Comparison Between Germany and the UK. SBR 62, January, 45-67.
Kohn, Alfie (1993). Why Incentive Plans Cannot Work. Harvard Business Review, SeptemberOctober.
Kube, Sebastian; Michel André Maréchal & Clemens Puppe (2008). The Currency of Reciprocity -Gift-Exchange in the Workplace. Working Paper Series, Working Paper No. 377, Institute for Empirical Research in Economics University of Zurich.
Lazear, Edward P. (1996). Personnel Economics. The Wicksell Lectures Cambridge, Mass: The MIT Press.
Lazear, Edward P. and Kathryn L. Shaw (2007), Personnel Economics: The Economist’s View of Human Resources. NBER Working Paper No. 13653. Cambridge, MA: National Bureau of Economic Research.
Lazear, Edward P.; Steffen Altmann & Klaus F. Zimmermann (2011). Inside the Firm: Contributions to Personnel Economics. Oxford University Press.
Longo, Rosario (2011). Establishing the business case for introducing cafeteria benefits, flexible plans, package compensation and voluntary benefits schemes. HR Professionals, Milan. http://rosariolongo.blogspot.com. ar/2011/10/establishing-business-case-for. html
Milgrom, Paul & John Roberts (1992). Economics, Organization and Management. Englewood Cliffs, NJ: Prentice Hall.
Prendergast, Canice (1999). The Provision of Incentives in Firms. Journal of Economic Literature 37: 7-63.
Prendergast, Canice (2008). Intrinsic Motivation and Incentives. American Economic Review. Papers & Proceedings, 98:2, 201-205.
Rosen, Sherwin (1974). Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition. The Journal of Political Economy, Vol. 82, No. 1. (Jan. - Feb.), 34-55.
Rosen, Sherwin (1978). Substitution and Division of Labour. Economica, 45, 235-250.
Rosen, Sherwin (1986). The Theory of Equalising Differences. En: Ashenfelter, O. and R. Layard (eds.) Handbook of Labor Economics, Volume 1, Chapter 12, Elsevier Science Publishers. Siehl, Caren; Delly Killian & Francisco Pérez (1999). Ricardo Semler and Semco S.A.. Thunderbird School of Global Management. Harvard Business Review Case.
Smith, Adam (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Book I, Chapter X: Of Wages and Profit in the Different Employments of Labour and Stock. Edwin Cannan, ed., 1904. Library of Economics and Liberty.
Stewart, G. Bennett III (1993). Rethinking Rewards. Harvard Business Review, Perspectives, noviembre-diciembre.
Torrington, D., Hall, L. & Taylor, S. (2008). Human resource management. Essex: Prentice Hall.
Tsuji Hiroshi, Katsuhisa Fukuda, Takumi Yasunaga and Akira Koshi. Cafeteria-Style Benefits Plan Service System for Advanced Japanese Company (draft):http://citeseerx.ist.psu.edu/viewdoc/ download?doi=10.1.1.202.987&rep http://citeseerx.ist.psu.edu/viewdoc/ http://citeseerx.ist.psu.edu/viewdoc/
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Published
2015-12-01
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Artículos
How to Cite
Compensation and heterogeneity of agents. (2015). Criterio Libre, 13(23), 39-56. https://doi.org/10.18041/1900-0642/criteriolibre.2015v13n23.95
