We explore how inherent preferences for reciprocity and repeated interaction interact in an optimal incentive system. Developing a theoretical model of a long-term employment relationship, we first show that reciprocal preferences are more important when an employee is close to retirement. At earlier stages, repeated interaction is more important because more future rents can be used to provide incentives. ...
The present paper uses a large representative data set for Germany to analyze the effect of an enriched job design, which is characterized by a high degree of autonomy and multitasking, on job satisfaction. In our empirical approach we take job satisfaction as a proxy variable for workers’ utility following the approach suggested in Clark/Oswald (1996). We present clear evidence that modern job design ...