Abstract
Many economically important contracts are incomplete. This holds in particular for the employment relationship. Very often the labor contract just stipulates a wage payment and leaves out many details that actually determine performance (see, e.g., Baker, Jensen, and Murphy (1988)). Under conditions of incompletely specified obligations and only weak or absent explicit performance incentives the issue of motivation arises.
... motivation problems arise only because some plans cannot be described in a complete, enforceable contract.“
Milgrom and Roberts (1992, p. 127)
“A thorough understanding of internal incentive structures is critical [...], since these incentives determine to a large extent how individuals inside an organization behave.”
Baker, Jensen and Murphy (1988, p. 593)
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Gächter, S., Falk, A. (2002). Work Motivation, Institutions, and Performance. In: Zwick, R., Rapoport, A. (eds) Experimental Business Research. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-5196-3_15
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