Incentive reversal

Eyal Winter*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

By incentive reversal we refer to situations in which an increase in rewards for all agents results in fewer agents exerting effort. We show that externalities among peers may give rise to such intriguing situations even when all agents are fully rational. We provide a necessary and sufficient condition for the organizational technology so that it will be susceptible to incentive reversal. The condition implies that some degree of complementarity is enough to allow incentive reversal.

Original languageAmerican English
Pages (from-to)133-147
Number of pages15
JournalAmerican Economic Journal: Microeconomics
Volume1
Issue number2
DOIs
StatePublished - 1 Aug 2009

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