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It's What You Say Not What You Pay

AutorBrandts, Jordi ; Cooper, David J.
Palabras claveChange
Incentives
Coordination
Communication
Experiments
Organizations
Fecha de publicación18-feb-2005
SerieUFAE and IAE Working Papers
643.05
ResumenWe study manager-employee interactions in experiments set in a corporate environment where payoffs depend on employees coordinating at high effort levels; the underlying game being played repeatedly by employees is a weak-link game. In the absence of managerial intervention subjects invariably slip into coordination failure. To overcome a history of coordination failure, managers have two instruments at their disposal, increasing employees' financial incentives to coordinate and communication with employees. We find that communication is a more effective tool than incentive changes for leading organizations out of performance traps. Examining the content of managers' communication, the most effective messages specifically request a high effort, point out the mutual benefits of high effort, and imply that employees are being paid well.
URIhttp://hdl.handle.net/10261/1761
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