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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/20380| Title: | High Compensation Creates a Ratchet Effect |
| Keywords: | J60 J30 D80 ddc:330 principal-agent compensation moral hazard wealth effects Ratchet effects high-powered incentives Vergütungssystem Anreizvertrag Leistungsmotivation Vermögenseffekt Arbeitsmobilität Agency Theory Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | |
| Description: | We consider a firm which pays a worker for his effort over several periods. The more the firm pays in one period, the wealthier the worker is in the following periods, and so the more he must be paid for a given effort. This wealth effect can induce an employer to pay little initially and more later on. For related reasons, the worker may work harder than the employer prefers. The incentive contracts firms offer may therefore cap the worker?s earnings. Lastly, this wealth ratchet effect can induce excessive firing and turnover. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/20380 |
| Other Identifiers: | http://hdl.handle.net/10419/20380 ppn:386980365 |
| Appears in Collections: | EconStor |
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