My dissertation focuses on the role of incentives in the workplace. In Chapter 1, I study peer effects in pay-for-individual-performance jobs. Specifically, I explore whether, how, and why coworker performance matters when rewards are based on individual performance. When teamed with high-performing peers, I find that workers are more productive overall. I also find that workers who resign are unaffected by coworker performance in the period after they hand in their resignation notice. The findings suggest peer effects in pay-for-individual-performance jobs reflect reputational concerns about relative performance rather than competitive preferences. In Chapter 2, I present field evidence that sheds new light on incentive provision in multitask jobs. Specifically, I design and conduct a field experiment at a large-scale restaurant, where the pre-existing wage contract encourages workers to carry out their tasks in a way that is not perfectly aligned with the firm's preferences. The experimental treatment pays bonuses to waiters for the number of customers they serve, in addition to their tips for customer service and hourly wages. I compare worker performance under the treatment to that under the pre-existing contract, where workers are rewarded for overemphasizing customer service, to evaluate the effect of a wage contract that encourages undesirable behavior. I find that the average worker earns more, is more productive, and generates higher short-run profits for the firm when paid bonuses for customer volume. Overall, the findings suggest that sharpening wage contracts to deal with incentive problems in multitask jobs has benefits for workers as well as the firm. In Chapter 3, I present joint work (with Arvind N. Magesan at the University fo Calgary) on the beauty premium's role in the workplace. Specifically, we investigate whether, how, and why the beauty premium can be explained by the behaviour of workers after they are hired. We find that attractive workers earn more because they transfer effort from tasks that reward looks to tasks that reward effort. We also provide evidence against favorable treatment by customers and the employer as sources for the beauty premium. We conclude that the premium is largely driven by the worker's on-the-job behavior.

My dissertation focuses on the role of incentives in the workplace. In Chapter 1, I study peer effects in pay-for-individual-performance jobs. Specifically, I explore whether, how, and why coworker performance matters when rewards are based on individual performance. When teamed with high-performing peers, I find that workers are more productive overall. I also find that workers who resign are unaffected by coworker performance in the period after they hand in their resignation notice. The findings suggest peer effects in pay-for-individual-performance jobs reflect reputational concerns about relative performance rather than competitive preferences. In Chapter 2, I present field evidence that sheds new light on incentive provision in multitask jobs. Specifically, I design and conduct a field experiment at a large-scale restaurant, where the pre-existing wage contract encourages workers to carry out their tasks in a way that is not perfectly aligned with the firm's preferences. The experimental treatment pays bonuses to waiters for the number of customers they serve, in addition to their tips for customer service and hourly wages. I compare worker performance under the treatment to that under the pre-existing contract, where workers are rewarded for overemphasizing customer service, to evaluate the effect of a wage contract that encourages undesirable behavior. I find that the average worker earns more, is more productive, and generates higher short-run profits for the firm when paid bonuses for customer volume. Overall, the findings suggest that sharpening wage contracts to deal with incentive problems in multitask jobs has benefits for workers as well as the firm. In Chapter 3, I present joint work (with Arvind N. Magesan at the University fo Calgary) on the beauty premium's role in the workplace. Specifically, we investigate whether, how, and why the beauty premium can be explained by the behaviour of workers after they are hired. We find that attractive workers earn more because they transfer effort from tasks that reward looks to tasks that reward effort. We also provide evidence against favorable treatment by customers and the employer as sources for the beauty premium. We conclude that the premium is largely driven by the worker's on-the-job behavior.

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U.S. healthcare costs have experienced unsustainable growth, with expenditures of $2.5 trillion in 2009, and are rising at a rate faster than that of the U.S. economy. A major factor in the cost of the U.S. healthcare system is related to the strategic behavior of system participants based on their incentives. This dissertation addresses the challenge of designing incentives to solve problems in healthcare systems. Principal agent theory and Markov decision processes are the primary methods used to construct incentives. The first problem considered is how to design contracts in order to align consumer and provider incentives with respect to preventive efforts. The model consists of an insurer contracting with two agents, a consumer and a provider, and focuses on the trade off between ex ante moral hazard and insurance. Two classes of efforts on behalf of the provider are studied: those which complement consumer efforts, and those which substitute with consumer efforts. The results show that the provider must be given incentives when the consumer is healthy to induce effort, and that inducing provider effort allows an insurer to save on incentives given to the consumer. The insurer can save on the cost of incentives by using a multilateral contract compared to the bilateral benchmark. These savings are illustrated by an example showing which model features affect the savings achieved. The second problem addresses the decision to provide knowledge to consumers regarding the consequences of health behaviors. The model developed to address this second problem extends the literature on incentives in healthcare systems to consider dynamic environments and includes a behavioral model of healthcare consumers. By using a learning model of consumer behavior, a policy maker's knowledge provision problem is transformed into a Markov decision process. This framework is used to solve for optimal knowledge provision policies regarding behaviors affecting coronary health. Sensitivity analysis shows robust threshold features of optimal policies. The results show that knowledge about smoking should be provided at most health and behavior states. As the cost of providing knowledge increases or aptitude for behavioral change decreases, fewer states are in the optimal knowledge provision policy, with healthy consumers dropping out first. Knowledge about diet and physical activity is provided more selectively due to the to uncertainty in the health benefits, and the time delay in accrued rewards.

The dissertation explores the effect of limited contractual commitment on the form of contracts and studies its welfare implications. The main focus is on foundations of incomplete contracts. The thesis studies to what extent incompleteness of contracts can be linked to contract renegotiation. Particular emphasis is put onto explaining the absence of a contract from a relationship. Chapter 1 reviews the literature on contract renegotiation and incomplete contracting. Chapter 2 is based on a version of the hold-up problem. It shows that contracts that are vulnerable to renegotiation cannot provide better investment incentives than no contract. The main driving force is that investment, although beneficial from a total surplus point of view, has an ambivalent effect on the investing party's payoff. It increases the benefit of an efficient action and decreases the benefit of an inefficient action. An example is investment into human capital, such as additional job training. It increases personal satisfaction in a challenging job but may also increase the frustration from a job that consists only of repetitive tasks. If an exact job description is not feasible ex-ante and if the non-investing party has all the bargaining power ex-post, contracts cannot compensate for the cost of investment. Chapter 3 formalizes the intuition that contracting involves a cost because a contract constitutes a less flexible status quo for ex-post bargaining than no contract. For this, asymmetric information is introduced. With asymmetric information contracting is potentially costly because an inefficient outcome is not necessarily undone by an ex-post bargain. For example, during the renegotiation of the contract between General Motors and Fisher Body, the latter adopted a cost intensive production technology in order to convince its partner to renege on the former agreement. In the model of this chapter, parties weigh the benefit of a contract against lost flexibility. If these effects are similar, no contract is written. The possibility that a contract might be strictly dominated by no contract is explored in chapters 4 and 5. Such a strict dominance result is interesting because it is a more forceful advocate for the incomplete contract assumption. Chapter 4 contains a version of the durable good monopoly model with no discounting but costly contracting. These could be writing or legal costs. Early contracting is less costly than late contracting which highlights the idea that bargaining at a deadline is more costly. But also, early contracting suffers from the ratchet effect because it releases information. The main result says that the costs of the ratchet effect outweigh the cost savings, even if initial contracting costs are of order of magnitude smaller than late contracting costs. The seller strictly prefers to offer no contract. In chapter 5, a sequential screening model endogenizes the fixed contracting cost. The buyer is privately informed about one part of the good's value but ignores the second part, which is revealed later. Early contracting is beneficial because it suffers less from asymmetric information than does late contracting. Nevertheless, if uncertainty with respect to the first variable is greater than uncertainty with respect to the second variable, the seller cannot take advantage of this fact and he strictly prefers to wait. Moreover, if this is not the case, contracts are partially incomplete because they are not conditioned on the second variable. Finally, the thesis reports the new effect that all contracts are renegotiated in equilibrium. This is in contrast to the renegotiation proofness principle, which states that in models of contracting with renegotiation one can restrict attention to renegotiation proof contracts.

Thesis (MProjMgmt)--University of South Australia, 2000

Zugl.: Oestrich-Winkel, Europ. Business School, Diss., 2005. / Also available in print.

Thesis (M.S.)--Virginia Polytechnic Institute, 1957. / Vita. Abstract. Includes bibliographical references (leaves 114-117). Also available via the Internet.

Zugl.: Oestrich-Winkel, Europ. Business School, Diss., 2005. / Description based on print version record.

Thesis (Ph. D.)--University of Hong Kong, 1999. / Includes bibliographical references (leaves 121-131).