title: Managerial bonuses, subordinates’ disobedience, and coercion
creator: Nikiforakis, Nikos 
creator: Oechssler, Jörg 
creator:  Shah, Anwar
subject: 330
subject: 330 Economics
description: This study provides evidence from a laboratory experiment showing that managerial bonuses can affect adversely a manager’s subordinates. In our set up, managers compete to obtain a large bonus which depends partly on the effort exerted by their subordinates. Managers can suggest an effort level and coerce subordinates who disobey by punishing them. When managers compete for individual bonuses, we find that subordinates do not obey their demands. This doubles coercion rates relative to a control treatment without bonuses. In contrast, when managers compete for pooled bonuses which give managers discretionary power over the allocation of the bonus, most  subordinates exert maximal effort. Although managers share a substantial fraction of the bonus, they are not worse off than they are with an individual bonus. A model in which agents care about inequality in earnings can account for the main findings in our experiment.
date: 2015-03
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/18580/1/Nikoforakis%20Oechssler%20Shah_2015_dp589.pdf
identifier: DOI:10.11588/heidok.00018580
identifier: urn:nbn:de:bsz:16-heidok-185802
identifier:   Nikiforakis, Nikos  ; Oechssler, Jörg  ;  Shah, Anwar  (2015) Managerial bonuses, subordinates’ disobedience, and coercion.  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/18580/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng