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Killing Conscience: The Unintended Behavioral Consequences of \u22Pay for Performance\u22

By Lynn A. Stout

Abstract

Contemporary lawmakers and reformers often argue that ex ante incentive contracts providing for large material rewards are the best and possibly only way to motivate corporate executives and other employees to serve their firms\u27 interests. This Article offers a critique of the \u22pay for performance\u22 approach. In particular, it explores why, for a variety of mutually reinforcing reasons, workplaces that rely on ex ante incentive contracts suppress unselfish prosocial behavior (conscience) and promote selfishness and opportunism. The end result may not be more efficient, but more uncooperative, unethical, and illegal employee behavior

Topics: Ex ante incentive contracts, Executive compensation, Business Organizations Law, Contracts
Publisher: Scholarship@Cornell Law: A Digital Repository
Year: 2014
OAI identifier: oai:scholarship.law.cornell.edu:facpub-2526
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