Citation

Discussion Paper Details

Please find the details for DP5962 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Monitoring and Pay: An Experiment on Employee under Endogenous Supervision

Author(s): Dennis Dittrich and Martin Kocher

Publication Date: December 2006

Keyword(s): efficiency wages, experiment, incentive contracts, incomplete contracts, reciprocity and supervision

Programme Area(s): Labour Economics

Abstract: We present an experimental test of a shirking model where monitoring intensity is endogenous and effort a continuous variable. Wage level, monitoring intensity and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, monitoring and pay should be complements. In our experiment, between and within treatment variation is qualitatively in line with the normative predictions of the model under selfishness assumptions. Yet, we also find evidence for reciprocal behavior. The data analysis shows, however, that it does not pay for the employer to rely on the reciprocity of employees.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5962

Bibliographic Reference

Dittrich, D and Kocher, M. 2006. 'Monitoring and Pay: An Experiment on Employee under Endogenous Supervision'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5962