In this dissertation, I conduct experimental labor markets to investigate the effectiveness of an optimal agency contract in inducing employee effort and maximizing firm profit. I compare firm profit under the optimal agency contract to that under a theoretically sub-optimal contract that relies on the norm of reciprocity to motivate employee effort, and explore how factors outside standard agency models affect the relative profitability of the two contracts. Experimental results show that firm profit is higher under the optimal agency contract in markets where only one of the two contracts is available, but is statistically indistinguishable between the two contracts in markets where both contracts are available. These results are inconsistent with the assumptions of agency theory, but are consistent with my proposition that employees'perceptions about the intentions underlying firms' contract offers, which play no role in standard agency theory, influence employees' reactions to the offers, and that this, in turn, affects the relative profitability of the two contracts. The implications of these results for research on incentives, contracting, and social norms, and for the design of management control systems in practice, are discussed.
| Identifer | oai:union.ndltd.org:PITT/oai:PITTETD:etd-07132005-092118 |
| Date | 13 July 2005 |
| Creators | Kuang, Xi |
| Contributors | Roberto A. Weber, Donald V. Moser, Vicky B. Hoffman, John H. Evans, R. Lynn Hannan |
| Publisher | University of Pittsburgh |
| Source Sets | University of Pittsburgh |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.library.pitt.edu/ETD/available/etd-07132005-092118/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University of Pittsburgh or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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