Department of Economics and Business Economics

Managing intrinsic motivation in a long-run relationship

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Managing intrinsic motivation in a long-run relationship. / Eliaz, Kfir; Spiegler, Ran.

In: Economics Letters, Vol. 165, 01.04.2018, p. 6-9.

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Eliaz, Kfir ; Spiegler, Ran. / Managing intrinsic motivation in a long-run relationship. In: Economics Letters. 2018 ; Vol. 165. pp. 6-9.

Bibtex

@article{af92d8023f6e4294a51e43b9259dddc6,
title = "Managing intrinsic motivation in a long-run relationship",
abstract = "We study a repeated principal–agent interaction, in which the principal offers a ”spot” wage contract at every period, and the agent's outside option follows a Markov process with i.i.d shocks. If the agent rejects an offer, the two parties are permanently separated. At any period during the relationship, the agent is productive as long as his wage does not fall below a ”reference point” which is defined as his lagged-expected wage in that period. We characterize the game's unique Markov perfect equilibrium. The equilibrium path exhibits an aspect of wage rigidity. The agent's total discounted rent is equal to the maximal shock value.",
keywords = "Dynamic contracting, Intrinsic motivation, Principal–agent, Reference-dependence, Wage rigidity",
author = "Kfir Eliaz and Ran Spiegler",
year = "2018",
month = "4",
day = "1",
doi = "10.1016/j.econlet.2018.01.018",
language = "English",
volume = "165",
pages = "6--9",
journal = "Economics Letters",
issn = "0165-1765",
publisher = "Elsevier BV",

}

RIS

TY - JOUR

T1 - Managing intrinsic motivation in a long-run relationship

AU - Eliaz, Kfir

AU - Spiegler, Ran

PY - 2018/4/1

Y1 - 2018/4/1

N2 - We study a repeated principal–agent interaction, in which the principal offers a ”spot” wage contract at every period, and the agent's outside option follows a Markov process with i.i.d shocks. If the agent rejects an offer, the two parties are permanently separated. At any period during the relationship, the agent is productive as long as his wage does not fall below a ”reference point” which is defined as his lagged-expected wage in that period. We characterize the game's unique Markov perfect equilibrium. The equilibrium path exhibits an aspect of wage rigidity. The agent's total discounted rent is equal to the maximal shock value.

AB - We study a repeated principal–agent interaction, in which the principal offers a ”spot” wage contract at every period, and the agent's outside option follows a Markov process with i.i.d shocks. If the agent rejects an offer, the two parties are permanently separated. At any period during the relationship, the agent is productive as long as his wage does not fall below a ”reference point” which is defined as his lagged-expected wage in that period. We characterize the game's unique Markov perfect equilibrium. The equilibrium path exhibits an aspect of wage rigidity. The agent's total discounted rent is equal to the maximal shock value.

KW - Dynamic contracting

KW - Intrinsic motivation

KW - Principal–agent

KW - Reference-dependence

KW - Wage rigidity

UR - http://www.scopus.com/inward/record.url?scp=85044342946&partnerID=8YFLogxK

U2 - 10.1016/j.econlet.2018.01.018

DO - 10.1016/j.econlet.2018.01.018

M3 - Journal article

AN - SCOPUS:85044342946

VL - 165

SP - 6

EP - 9

JO - Economics Letters

JF - Economics Letters

SN - 0165-1765

ER -