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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | “Yes men”, integrity, and the optimal design of incentive contracts |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of Economic Behavior & Organization |
| Publisher | Elsevier |
| Geographical Reach | international |
| ISSN | 0167-2681 |
| Volume | 43 |
| Number | 1 |
| Page Range | 115 - 125 |
| Date | 2000 |
| Abstract Text | In a pioneering approach towards the explanation of the phenomenon of “yes man” behavior in organizations, Prendergast [American Economic Review 83 (1993) 757–770] argued that incentive contracts in employment relationships generally make a worker distort his privately acquired information. This would imply that there is a trade-off between inducing a worker to exert costly effort and inducing him to tell the truth. In contrast, we show that with optimally designed contracts, which we term integrity contracts, the worker will both exert effort and report his information truthfully, and hence the first best can be achieved. |
| Digital Object Identifier | 10.1016/S0167-2681(00)00112-8 |
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