The role of internal agents in starting salary negotiations

We introduce the concept that internal organizational agents who negotiate starting salary packages with job applicants may not always act in the organization's best interests. To gain an understanding of what motivates the internal agent toward assuming a particular role, we use expectancy theory, agency theory and concepts from the negotiations literature. We describe the roles that agents may assume, identify factors that impact agents' motivation, and formulate propositions to help identify which role an agent is likely to enact in starting salary negotiations. We form propositions as to how these roles are likely to impact final negotiation outcomes of probability of hiring, salary size, and applicant satisfaction and discuss strategies for ensuring agents are motivated to enact a role that meets organizational objectives.     

Team Incentives and Reference‐Dependent Preferences

We investigate a multi‐agent moral‐hazard model where agents have expectation‐based reference‐dependent preferences à la K?szegi and Rabin (2006, 2007). We show that even when each agent's probability of success in a project is independent, a principal may employ team incentives. Because the agents are loss averse, they have first‐order risk aversion to wage uncertainty. This causes the agents to work harder when their own failure is stochastically compensated through other agents' performance. In the optimal contract, agents with high performance are always rewarded, whereas agents with low performance are rewarded if and only if other agents' performance is high.     

Eliciting the socially optimal allocation from responsible agents

We consider designing a mechanism to allocate objects among agents without monetary transfers. There is a socially optimal allocation, which is commonly known by the agents but not observable by the designer. The designer possibly has information about the existence of responsible agents. A responsible agent, when indifferent between his objects at two different allocations, prefers the first allocation to the second if the first allocation is closer to the optimal allocation than the second, in the sense that all the agents who are allocated their optimal objects in the second allocation are allocated their optimal objects also in the first allocation, and there is at least one more agent in the first allocation receiving his optimal object. We show that, if the designer knows that there are at least three responsible agents, even if the identities of the responsible agents are not known, the optimal allocation can be elicited.     

Endogenous Social Comparisons and the Internal Organization of Firms

Should workers of a firm be organizationally integrated to realize benefits from benchmarking? Or should they be separated to preclude horizontal social comparisons? This paper highlights a trade‐off that arises if social comparisons in firms are endogenous. We analyze a principal multi‐agent model in which the principal trades off the reduction of agents' risk exposures by use of relative performance evaluation and the thereby induced social comparisons for which agents must be compensated. Contrary to standard theoretical predictions, relative performance evaluation is optimal only if the performance measures are sufficiently correlated relative to the agents' regard for others. Copyright © 2011 John Wiley & Sons, Ltd.     

How should a principal reward and support agents when firm performance is characterized by success or failure?

Principal‐agent models with multiple agents typically assume that the principal wishes to maximize the sum of the agents' achievements (net of the rewards paid to them). But in many settings, like R&D, all that the principal “needs” is that at least one agent will be “successful.” We identify settings where the principal actually wants agents to refrain from exerting high effort in order to save expected compensation. We show that the number of agents can decrease in the project's value for the principal. We also consider sequential efforts and investigate settings where the principal can provide support to agents.     

Managerial expertise,learning potential and dynamic incentives: get more for less?

In this paper the impact of ability and learning potential on incentive contracts is analyzed. A central feature of the model is that the true ability will not be revealed. The learning potential of an agent is modeled as the magnitude of impact on the agent's expected ability that learning‐by‐doing has in a given task. Absent a managerial labor market, depending on an agent's learning potential, a monotone or non‐monotone pay structure may be optimal. The second important result is that using agents' ability distributions as inputs to information systems, higher learning potentials lead to less costly information systems, i.e. actions can be implemented at lower costs. Additionally, it is proven that the criteria cost minimization and value maximization are equivalent in the model's context. Copyright © 2007 John Wiley & Sons, Ltd.     

Will a matchmaker invite her potential rival in?

This paper analyzes optimal strategies of an incumbent intermediary, who matches agents on the two sides of a market, in the presence of entry threat under alternative scenarios. It shows that, when entry is free, strategic entry accommodation is the optimal choice of the incumbent—not entry deterrence, unless the variation in agents' types is small. Entry accommodation remains optimal for the incumbent for a wide range of parametric configurations even when there is a fixed cost of entry. These results are in sharp contrast to the predictions of existing models of entry.     

Principal‐agent and Peer Relationships in Tournaments

Effort provision in tournaments may depend on both social preferences towards the competitor and social preferences towards the principal who designed the tournament. In a laboratory experiment, we analyze agents' behavior in different tournament settings that vary the distribution of the prize between agents. The principal chooses between a low and a high guaranteed payment. Standard economic theory predicts the same effort provision in all situations. Instead, our results show that both the generosity of the principal and the strict separation between winner and loser increase the effort level in tournaments. Moreover, agents focus their preferences either on the principal or on the agent. Copyright © 2014 John Wiley & Sons, Ltd.     

Recruitment,Training, and Career Concerns

We examine training and recruitment policies in a two‐period model that nests two forms of production, “routine” work where ability and effort are substitutes and “creative” work where they are complements. Alternative ways of improving average ability have opposite implications for agents' career concerns. Although teaching to the top (training complementary to ability) or identifying star performers increases agents' career concerns, teaching to the bottom has the opposite effect. The paper also makes more general comments relating to models of reputation.     

Bilateral redistribution

We explore the implications of three basic and intuitive axioms for income redistribution problems: continuity, no transfer paradox and stability. The combination of the three axioms characterizes in the two-agent case a large family of rules, which we call threshold rules. For each level of total income in society, a threshold is considered for each agent. It is impossible for both agents to be below their respective thresholds. If an agent’s income is below the threshold, the difference is redistributed from the other agent; otherwise, the rule imposes laissez-faire.     

Do tournaments solve the adverse selection problem?

This paper provides a solution to a puzzle in the analysis of tournaments, that of why there is no agent discrimination or differential contracting in certain business practice settings. The paper examines the problem of a principal contracting with multiple agents whose activities are subject to common shocks. The presence of common shocks invites the use of relative performance evaluation to minimize the costs of moral hazard. But, in the additional presence of adverse selection, the analysis shows that there may be no need for ex ante screening through menus of offers. This is so because the principal becomes better informed ex post about agent types, via the realization of common uncertainty, and can effectively penalize or reward the agents ex post. Thus, unlike the standard adverse selection problem without common uncertainty where the principal always benefits from ex ante screening, it is shown that ex post sorting through relative performance evaluation reduces the scope for ex ante screening through menus, and can eliminate it completely if agents are known to not be very heterogeneous. This is consistent with observed practice in industries where the primary compensation mechanism is a cardinal tournament which is uniform among employees. The analysis connotes that by using relative instead of absolute performance measures, firms with employees who are not substantially heterogeneous not only can alleviate the agency problem, but there is also no need to extract the agents' ex ante private information about their innate abilities via a screening menu.     

Turning Agents into Psychological Principals: Aligning Interests of Non‐Owners through Psychological Ownership

Principals who delegate tasks to agents face the perennial challenge of overcoming agency problems. We investigate whether feelings of ownership among senior managers in the absence of formal ownership can align agents' interests with those of principals, thus turning agents into psychological principals. Using a moderated mediation model, we find that psychological ownership is positively related to company performance through the mediating effect of individual‐level entrepreneurial behaviour. We also find that the effect of psychological ownership on individual‐level entrepreneurial behaviour and, ultimately, company performance is weaker for high levels of monitoring compared to low levels. These findings offer important contributions to agency, psychological ownership, and entrepreneurship literatures.     

Incentives in academics: Collaboration under weak complementarities

This paper considers a contracting relationship with multiple agents in a repeated setting under voluntary team formation. In each period, an opportunity to collaborate arrives stochastically but whether this opportunity has arrived is the agents' private information. The principal thus cannot simply tell them when to collaborate; she must instead guide them through incentives. The optimal contract in the repeated setting can drastically be different from that in the static setting and is often characterized as high-powered team incentives complemented with inefficiently low-powered individual incentives, which endogenously raise the cost of shirking. We then argue that low-powered incentives offered for non-collaborative works, as often observed in our profession, can be seen as an important part of optimal incentive schemes in an attempt to endogenously raise the cost of shirking. The mechanism presented here also has implications for internal team competition (team competition within firms) which has become increasingly popular these days.     

Two-stage elimination contests with optimal head starts

We study two-stage elimination Tullock contests. In the first stage all the players compete against each other; then some advance to the second stage while the others are removed. The finalists compete against each other in the second stage, and one of them wins the prize. To maximize the expected total effort, the designer can give a head start to the winner of the first stage when he competes against the other finalists in the second stage. We show that the optimal head start, independent of the number of finalists, always increases the players’ expected total effort. We also show how the number of players and finalists affect the value of the optimal head start.     

Management bonus plans in a multiple-agent environment

This paper analyses optimal linear incentive contracts in a single-principal multiple-agent setting. It is proved that the second-best share ratios are function of the other agents' effort levels as well their degrees of risk aversion and the risk aversion of the principal. It is also shown that the total bonus pool to all agents in a difficult to monitor (decentralized) firm is greater than the total bonus pool in a easier to monitor (centralized) firm.     

Allocation of Prizes in Contests with Participation Constraints

We study all‐pay contests with an exogenous minimal effort constraint where a player can participate in a contest only if his effort (output) is equal to or higher than the minimal effort constraint. Contestants are privately informed about a parameter (ability) that affects their cost of effort. The designer decides about the size and number of prizes. We analyze the optimal prize allocation for the contest designer who wishes to maximize either the total effort or the highest effort. It is shown that if the minimal effort constraint is relatively high, the winner‐take‐all contest in which the contestant with the highest effort wins the entire prize sum does not maximize the expected total effort or the expected highest effort. Rather, a random contest in which the entire prize sum is equally allocated to all the participants yields a higher expected total effort as well as a higher expected highest effort.     

Task assignment,incentives and technological factors

In this paper, we examine the allocation of tasks between a principal and an agent considering their incentives to provide effort, their different abilities in handling tasks, and transmission costs. We focus our attention on two tasks: the first may be handled by the principal or by the agent, whereas the second is necessarily carried out by the agent. Under a fully decentralised organisation, the agent performs both tasks, whereas, under partial delegation, the principal handles the first task and transfers the outcome to the agent who handles the second task. Assuming technological complementarities, from our analysis it emerges that, if there is imperfect observability of effort, full delegation is better at eliciting effort by the agent in the second task, whereas, in comparison with partial delegation, it lowers effort in the first task. Although with contractible effort, the choice between the two organisational forms depends only on transmission costs and on the relative ability of its members, when moral hazard problems are taken into account, the organisational choice is related to the relative importance played by the two tasks in production. If the agent's task is relatively important in production, full delegation, encouraging a higher level of effort in this task, may be optimal, even if technological factors favour partial delegation. Copyright © 2008 John Wiley & Sons, Ltd.     

The unanimity rule and extremely asymmetric committees

This paper analyzes how to allocate experts into committees that use the unanimity rule to make decisions. We show that an optimal allocation of experts is extremely asymmetric. To reach the optimal allocation, therefore, one needs only to rank the experts in terms of their abilities and then allocate adjacent experts such that an expert’s ability tends to vary inversely with the size of his committee. In the special case of three-member committees, we show that the optimal allocation maximizes the sum of the products of the experts’ skills in each committee.     

Empirical labor search: A survey

This paper surveys the existing empirical research that uses search theory to empirically analyze labor supply questions in a structural framework, using data on individual labor market transitions and durations, wages, and individual characteristics. The starting points of the literature are the Mincerian earnings function, Heckman's classic selection model, and dynamic optimization theory. We develop a general framework for the labor market where the search for a job involves dynamic decision making under uncertainty. It can be specialized to be in agreement with most published research using labor search models. We discuss estimation, policy evaluation with the estimated model, equilibrium model versions, and the decomposition of wage variation into factors due to heterogeneity of various model determinants as well as search frictions themselves. We summarize the main empirical conclusions.     

论优秀的设计师如何参与团队协作

在一个设计团队中不同的专业人员通常都要协同工作,而作为一名优秀的工业设计师不仅需要专业的技能同时要具备一定的团队协作能力,本文将从多个方面来阐述工业设计师必须具备的某些团队协作能力。