Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104352
Authors: 
Dittrich, Dennis A. V.
Kocher, Martin G.
Year of Publication: 
2011
Series/Report no.: 
Munich Discussion Paper 2011-9
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 standard assumptions. Yet, we also find evidence for reciprocal behavior. Our data analysis shows, however, that it does not pay for the employer to solely rely on the reciprocity of employees.
Subjects: 
incentive contracts
supervision
efficiency wages
experiment
incomplete contracts
reciprocity
JEL: 
C91
J31
J41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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