In this paper we study the mechanics of “leading by example” in teams. Leadership is beneficial for the entire team when agents are conformists, i.e., dislike effort differentials. We also show how leadership can arise endogenously and discuss what type of leader benefits a team most. JEL codes: C72; D23; D63; J31; L23.

Allocation rules for cooperative games can be manipulated by coalitions merging into single players, or, conversely, players splitting into a number of smaller units. This paper collects some (im)possibility results on mergingand splitting-proofness of (core) allocation rules for cooperative games with side-payments. JEL classification: C71, D23, D71.

We explore the twin hypotheses (i) that high-performance incentives, worker ownership of assets, and worker freedom from direct controls are complementary instruments for motivating workers, and (ii) that such instruments can be expected to covary positively in cross-sectional data. We also relate our conclusions to empirical evidence, particularly that on the organization, compensation, and ma...

We correct an omission in the definition of the domain of weakly responsive preferences introduced in [B. Klaus, F. Klijn, Stable matchings and preferences of couples, J. Econ. Theory 121 (2005) 75–106] or KK05 for short. The proof of the existence of stable matchings [KK05, Theorem 3.3] and a maximal domain result [KK05, Theorem 3.5] are adjusted accordingly. © 2009 Elsevier Inc. All rights re...

We study selection contests in which the strategic variable is the degree of risk rather than the amount of effort. The selection efficiency of such contests is examined. We show that the selection efficiency of a contest may be improved by limiting the competition in two ways; a) by having a small number of contestants, and b) by restricting contestant quality. JEL Classification: C44, D29, D8...

Dynamic Contracts and Learning by Doing This paper studies the design of optimal contracts in dynamic environments where agents learn by doing. We derive a condition under which contracts are fully incentive compatible. A closed-form solution is obtained when agents have CARA utility. It shows that human capital accumulation strengthens the power of incentives and allows the principal to provid...

We apply the comparative techniques originated by Wolpin, K.I. (1977, Education and screening, American Economic Review, 67, 949–958) and Psacharopoulos (1979, On the weak versus the strong version of the screening hypothesis, Economics Letters, 4, 181–185) to discriminate between the ‘weak’ and ‘strong’ screening hypotheses. Controlling for sample selection, we find evidence for weak but not s...

Abstract We measure U.S. listed companies’ skilled labor risk—that is, the potential failure in attracting and retaining labor, by intensity of discussions on this issue 10-K filings. show that effectively captures firm risk due to mobility labor. find an increase from 25th 75th percentile would wage 22% (or $15,593) also lead higher equity-based incentive pay. The interacts with other corporat...

Using administrative payroll data from the largest US processing company, we measure extent of nominal wage rigidity in United States. The allow us to define a worker’s per-period base contract separately other forms compensation such as overtime premiums and bonuses. We provide evidence that firms use wages cyclically adjust marginal cost their workers. Nominal declines are much rarer than pre...

A central issue in designing incentive contracts is the decision to reward agents’ input use versus outputs. The trade-off between risk and return innovation production can also lead agents with varying skill levels perform differentially under different contracts. We study this experimentally, observing verifying inputs outputs Indian maternity care. find that both contract types achieve compa...