Abstract
“Behaviour cannot be invented in the armchair. It has to be observed.” This statement by Reinhard Selten (1998, p. 414) is particularly true and relevant when designing organisations and incentive schemes with the aim to motivate employees and facilitate coordination and cooperation in firms. Experiments are a powerful tool to observe behaviour under controlled conditions and thereby to draw inferences about causal influences on behaviour.
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- 1.
- 2.
Since we implemented the constraint of a non-negative fixed-wage component α, it is not possible to “sell the shop”, i.e., to set up contracts that sell the working output to the agent. Therefore the here presented optimal contract does not induce the “first-best” working effort, i.e., the effort level that would maximize the sum of the principal’s and agent’s payoff: e eff = k/c.
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- 4.
We assume that sabotage is costlier than productive effort resembling the fact that in the workplace an agent usually has to exert some extra effort to conceal the destructive activity at least in front of the employer. Agents are modeled symmetrically. For a discussion of the impact of sabotage when agents are asymmetric see Harbring et al. (2007).
- 5.
A lump sum of 90 Taler is deducted from the principal’s payoff in each round which models part of the cost of the implemented wage scheme.
- 6.
This section is part of a larger research project on the impact of team decision making on efficient coordination in coordination games. See Feri et al. (2010).
- 7.
We use the term “group” to refer to the entity of players who interact with each other, whereas “team” refers to three subjects who have to choose one number. The “group size” in our experiment is always five, i.e., the coordination game is played either by five individuals or by five teams.
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Acknowledgment
The authors are grateful for the delicious cakes and the inspiring atmosphere provided by Café Jansen (Cologne), Café Sturm (Bonn), Café Zum Roten Turm (Erfurt), and Café Sacher (Innsbruck). Following the example of Reinhard Selten the authors spent a considerable number of hours in these cafés where many of the ideas discussed here were born.
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Harbring, C., Irlenbusch, B., Sliwka, D., Sutter, M. (2010). The Analysis of Incentives in Firms: An Experimental Approach. In: Sadrieh, A., Ockenfels, A. (eds) The Selten School of Behavioral Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-13983-3_14
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