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Career Concerns in Teams
Emmanuelle Auriol, Guido Friebel and Lambros Pechlivanos
Journal of Labor Economics
Vol. 20, No. 2 (April 2002), pp. 289-307
Published by: The University of Chicago Press on behalf of the Society of Labor Economists and the NORC at the University of Chicago
Stable URL: http://www.jstor.org/stable/10.1086/338240
Page Count: 19
You can always find the topics here!Topics: Contract incentives, Sabotage, Salary, Cost functions, Incentive pay, Employee compensation, Temporary labor, Wage contracts, Business orders, Insurance agents
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We investigate how changes in the commitment power of a principal affect cooperation among agents who work in a team. When the principal and her agents are symmetrically uncertain about the agents’ innate abilities, workers have career concerns. Then, unless the principal can commit herself to long‐term wage contracts, an implicit sabotage incentive emerges. Agents become reluctant to help their teammates. Anticipating this risk, and in order to induce the desired level of cooperation, the principal offers more collectively oriented incentive schemes. Temporary workers, though, are not affected by the sabotage effect, and their incentives are more individually oriented.
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