American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Incentive Reversal
American Economic Journal: Microeconomics
vol. 1,
no. 2, August 2009
(pp. 133–47)
Abstract
By incentive reversal we refer to situations in which an increase in rewards for all agents results in fewer agents exerting effort. We show that externalities among peers may give rise to such intriguing situations even when all agents are fully rational. We provide a necessary and sufficient condition for the organizational technology so that it will be susceptible to incentive reversal. The condition implies that some degree of complementarity is enough to allow incentive reversal. (JEL D23, D82, M54)Citation
Winter, Eyal. 2009. "Incentive Reversal." American Economic Journal: Microeconomics, 1 (2): 133–47. DOI: 10.1257/mic.1.2.133JEL Classification
- D23 Organizational Behavior; Transaction Costs; Property Rights
- D82 Asymmetric and Private Information
- M54 Personnel Economics: Labor Management
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