This course is suitable for Master students only (7 LP) and will be held in English.
The course focuses on the provision of incentives in organizations. Since the interests of workers and their employers are not necessarily aligned, an important question is how firms can design compensation schemes or jobs to induce workers to act in the employer's interest.
In particular, the course covers incentives in team work and tournamens. In teams, the joint performance determines the payoff of individuals, whereas in tournaments the relative performance is relevant. We discuss applications to sports contests and political rent-seeking. Apart from the standard assumption of completely rational and selfish agents (homo oeconomicus), we also consider the effect of non-standard preferences (e.g. envy, inequality aversion or status-concerns).
The course consists of two parts. In the first part, students become familiar with theoretical models and their predictions of individual behavior. In the second part of the course, we study empirical and experimental evidence on actual behavior as well as extensions of the models. Here, students present and critically discuss a paper from the large literature on economic incentives.