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dc.contributor.authorNosenzo, Danieleen_US
dc.contributor.authorOfferman, Theoen_US
dc.contributor.authorSefton, Martinen_US
dc.contributor.authorvan der Veen, Ailkoen_US
dc.description.abstractWe examine the effectiveness of bonuses and fines in an inspection game where an employer can learn the effort of a worker through costly inspection. Standard game theoretic analysis predicts that fines discourage shirking, whereas bonuses encourage shirking. In contrast, ownpayoff effects suggest that both fines and bonuses discourage shirking. In an experiment we find that fines are more effective than bonuses in reducing shirking. However, we do not find that bonuses encourage shirking. Behavioral theories based on Impulse Balance Equilibrium or Quantal Response Equilibrium provide a good account of deviations from Nash equilibrium predictions.en_US
dc.publisherCEDEX Nottinghamen_US
dc.relation.ispartofseriesCeDEx discussion paper series 2010-21en_US
dc.subject.keywordinspection gamesen_US
dc.subject.keywordcostly monitoringen_US
dc.subject.keywordrewards and punishmentsen_US
dc.subject.keywordbonuses and finesen_US
dc.subject.keywordquantal response equilibriumen_US
dc.subject.keywordimpulse balance equilibriumen_US
dc.titleInducing good behavior: Bonuses versus fines in inspection gamesen_US
dc.typeWorking Paperen_US
Appears in Collections:CeDEx Discussion Paper Series, The University of Nottingham

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