@techreport{Demougin2009Implicit,
abstract = {We derive the optimal contract between a principal and a liquidity-constrained agent in a stochastically repeated environment. The contract comprises a court-enforceable explicit bonus rule and an implicit fixed salary promise that must be self-enforcing. Since the agent's rent increases with bonus pay, the principal implements the maximum credible salary promise. Thus, the bonus increases while the salary promise and the agent's effort decrease with a higher probability of premature contract termination. We subject this mechanism to econometric testing using personnel data of an insurance company. The empirical results strongly support our theoretical predictions.},
address = {M\"{u}nchen},
author = {Dominique M. Demougin and Oliver Fabel and Christian Thomann},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {J3; M5; 330; implicit contract; explicit bonus pay; premature contract termination; compensation and productivity estimates; Anreizvertrag; Implizite Kontrakte; Leistungsanreiz; Provision; Agency Theory; Theorie; Versicherungsvermittlung; Deutschland},
language = {eng},
number = {2645},
publisher = {CESifo},
title = {Implicit vs. explicit incentives : theory and a case study},
type = {CESifo working paper},
url = {http://hdl.handle.net/10419/30549},
year = {2009}
}
