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. ...
München:
CESifo,
2017,
(CES Working Papers No. 6635)
| Matthias Fahn, Anne Schade, Katharina Schüßler