Contract design with socially attentive preferences

• 成果类型: Article
• 署名作者: Koch, Simon; Weinschenk, Philipp
• 署名单位: University of Kaiserslautern
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2021.10.002
• 发表日期: 2021
• 页码: 591-601
• 关键词: Agency model; Socially attentive preferences; incentives

摘要

The standard agency model assumes that the agent does not care how his decisions influence others. This is a strong assumption, which we relax. We find that, although monetary incentives are also effective with socially attentive agents, the principal may optimally set none. This could explain the puzzle why empirically only a fraction of employees experiences monetary incentives. Furthermore, in case the agent's type is private information, the principal optimally offers a single pooling contract, i.e., never screens for different types, no matter how rich the set of possible attentiveness levels is and what shape the underlying distribution function has. (C) 2021 Elsevier Inc. All rights reserved.