This paper deals with the interplay between economic incentives and social norms in firms. We outline a simple model of team production and provide preliminary results on linear incentive schemes in the presence of a social norm that may cause multiple equilibria. The effect of the social norm on the optimal bonus rate is discussed, as well as the effectiveness of temporary changes in the bonus rate as a means to move a firm from a bad to a good equilibrium.
Working Paper No. 565
Social Norms and Optimal Incentives in Firms
Working Paper
Reference
Huck, Steffen, Dorothea Kübler and Jörgen Weibull (2001). “Social Norms and Optimal Incentives in Firms”. IFN Working Paper No. 565. Stockholm: Research Institute of Industrial Economics (IFN).
Huck, Steffen, Dorothea Kübler and Jörgen Weibull (2001). “Social Norms and Optimal Incentives in Firms”. IFN Working Paper No. 565. Stockholm: Research Institute of Industrial Economics (IFN).
Authors
Steffen Huck,
Dorothea Kübler,
Jörgen Weibull
