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Article Dans Une Revue Games and Economic Behavior Année : 2018

Goal Setting in the Principal-Agent Model : Weak Incentives for Strong Performance

Résumé

We study a principal–agent framework in which principals can assign wage-irrelevant goals to agents. We find evidence that, when given the possibility to set wage-irrelevant goals, principals select incentive contracts for which pay is less responsive to agents' performance. Agents' performance is higher in the presence of goal setting despite weaker incentives. We develop a principal–agent model with reference-dependent utility that illustrates how labor contracts combining weak monetary incentives and wage-irrelevant goals can be optimal. The pervasive use of non-monetary incentives in the workplace may help account for previous empirical findings suggesting that firms rely on unexpectedly weak monetary incentives.

Dates et versions

hal-02312063 , version 1 (27-02-2020)

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Brice Corgnet, Joaquín Gómez-Miñambres, Roberto Hernán-González. Goal Setting in the Principal-Agent Model : Weak Incentives for Strong Performance. Games and Economic Behavior, 2018, 109, 311-326 p. ⟨10.1016/j.geb.2017.12.017⟩. ⟨hal-02312063⟩
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