Economics of Incentives: Do workers always work harder under control?

Please provide me with a full explanation. Thank you.

 

a)   Explain the below statement and how it related to the question Do workers always work harder under control? Give example.

If the goal of control is not to affect a particular person.

 

b) Explain the below statement and how it related to the question Do workers always work harder under control? Give example.

If it safeguards the control person's endowment.

 

c) Please briefly describe the Hidden Cost of Control  Model by Falk & Kosfeld (2006).

 

d) Please explain the formulas below.

The monetary payoffs are by Falk & Kosfeld (2006):

π 1/A (y, x) = π 0 A − x for the agent, and

π 1/P (y, x) = π 0 P + 2*x for the principal.

 

e) Please explain the following two sentences.

From the experiment, two effects of control were identified by Falk & Kosfeld (2006):

1. The agent is obliged to provide at least the necessary benchmark, x, through the direct action of control. Any other action by the agent is reflected in the indirect effect of control.

2. If and only if the indirect result of control is detrimental, there are hidden costs of control.

 

 

f)  Please fully explain both hypotheses in detail with examples the two hypothesizes which is  drawn from the experiment by Falk & Kosfeld (2006):

Hypothesis 1: The costs associated with the implementation of the control

Hypothesis 2: The costs associated with the enforcement of the control

 

g) Please explain the following TWO Economic Models.

Concept of Utility: characterize the potential reactions of workers while being regulated.

Example:

If the benefits of working hard, like increased income, outweigh the negatives, like extra effort, then employees may be more motivated to work hard.
 

Game Theory: able to describe the manner in which employees might react to being managed

Example:

How employees might respond to various incentives if employees think they'll get paid for their work, they may work harder.

 

h) Please explain the following TWO Management Implications.

- Control can be helpful in raising worker performance.

- The workers' productivity and efficiency can increase when they are aware of the legitimacy of their employer's control

 

i) Please explain to relation with Economics of Incentives.

1. The intended direct consequence of stopping a particular activity, and

2. The unintended indirect effect of eliciting unfavorable responses.

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Here is my explanation a If the goal of control is not to affect a particular person This means that control is implemented not to target or influence ... View the full answer