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Monotone vs. non-monotone incentive structures: an experimental analysis

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  • Christian Lukas

Abstract

This paper reports results from an experiment studying contract choice and effort provision under different contracts in a long-term agency relationship. Principals can choose between a theoretically optimal non-monotone contract N and a monotone contract M. Agents in general provide more effort under M than under N. Information about incentive compatibility further increases effort provision under contract M but not under contract N. However, principals who constantly select contract N realise the highest payoffs.

Suggested Citation

  • Christian Lukas, 2018. "Monotone vs. non-monotone incentive structures: an experimental analysis," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 16(1), pages 12-34.
    • Handle: RePEc:ids:ijecbr:v:16:y:2018:i:1:p:12-34
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    References listed on IDEAS

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