The tenuous relationship between effort and performance pay
MetadataVis full innførsel
- Discussion papers (FOR) 
When a worker is offered performance related pay, the incentive effect is not only determined by the shape of the incentive contract, but also by the probability of contract enforcement. We show that weaker enforcement may reduce the worker s effort, but lead to higher- powered incentive contracts. This creates a seemingly negative rela- tionship between effort and performance pay.