Social Exchange and Common Agency in Organizations

We study the relation between formal incentives and social exchange in organizations where employees work for several managers and reciprocate a manager’s attention with higher effort. To this end we develop a common agency model with two-sided moral hazard. We show that when effort is contractible but attention is not, the first-best can be achieved through granting autonomy of effort choice to employees and giving bonus pay to both managers and employees. When neither effort nor attention are contractible, an ‘attention race’ arises, as each manager tries to sway the employee’s effort his way. While this may result in too much social exchange, the attention race may also be a blessing because it alleviates managers’ moral-hazard problem in attention provision. Lastly, we derive the implications of these contract imperfections for optimal organizational design.social exchange, reciprocity, incentive contracts, common agency, organizational design

Reciprocity and Incentive Pay in the Workplace

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.Reciprocity, social exchange, incentive contracts, double moral hazard, GSOEP

When Eyes Like Yours Looked Into Eyes Like Mine

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Social Exchange and Common Agency in Organizations

We study the relation between formal incentives and social exchange in organizations where employees work for several managers and reciprocate to a manager's attention with higher effort. To this end we develop a common agency model with two-sided moral hazard. We show that when effort is contractible and attention is not, the first-best can be achieved through bonus pay for both managers and employees. When neither effort nor attention are contractible, an 'attention race' arises, as each manager tries to sway the employee's effort his way. While this may result in too much social exchange, the attention race may also be a blessing because it alleviates managers' moral-hazard problem in attention provision. Lastly, we derive the implications of these contract imperfections for optimal organizational design

Why does Centralisation fail to internalise Policy Externalities?

Centralisation of political decision making often fails to produce the desired results. For instance, it is frequently argued that decision making within the European Union results in overspending and overregulation in some policy areas, while too low spending and too little regulation prevails in other policy areas. In this paper, we study a model in which delegates from jurisdictions bargain over the amounts of public goods provided by jurisdictions. Following Besley and Coate (2000) we show that local policy makers have an incentive to delegate bargaining to 'public good lovers' if all the cost of public goods are shared through a common budget. Consequently, overprovision of public goods results. If a sufficiently large part of the cost of public goods can not be shared among regions, underprovision of public goods persists under centralised decision making because local policy makers delegate bargaining to 'conservatives'. Underprovision is strongest when spillover effects are moderate: both in the absence of spillover effects and in the case of global public goods, centralised decision making produces the social optimum. Finally, we study financing rules that may help to avoid strategic delegation by local policy makers

Reciprocity and Incentive Pay in the Workplace

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay

Ecosystem-Based Management in the Arctic Ocean: A Multi-Level Spatial Approach

Ecosystem-based management (EBM) first requires the identification of spatial units capturing the ecosystem structure and functions. To this end, the Arctic Council has adopted the Large Marine Ecosystem (LME) framework. Ecosystem experts have identified 17 Arctic LMEs and mapped them for monitoring and assessment purposes. We provide an overview of their major ecological features. The ecosystem approach has also been developed nationally, with EBM initiatives undertaken as part of the national ocean policy frameworks and actions plans of the United States and Canada. A case study of the Beaufort Sea Large Ocean Management Area (LOMA) established for integrated ocean management purposes shows how Canada’s national spatial framework is being implemented at the subregional level. A comparison of this framework to the international LME that overlaps it in the Canadian waters of the Beaufort Sea demonstrates that both approaches are based on the same principles and criteria, and aim at the same goal: giving primary consideration to the marine ecosystem when managing activities. The two approaches are complementary because they are applied at different spatial and governance levels: regional (Arctic-wide) and subregional (in Canadian Arctic waters). A multi-level spatial framework, science-based management tools, and a governance structure are now available to managers in the Beaufort Sea pilot region; now managers must put in the effort needed to make EBM operational and address the complex environmental issues facing the Arctic.La gestion basée sur l’écosystème (GÉ) requiert tout d’abord l’identification d’unités spatiales qui capturent la structure et les fonctions de l’écosystème. À cette fin, le concept des Grands écosystèmes marins (GEM) a été adopté par le Conseil de l’Arctique et 17 GEM ont été identifiés et cartographiés dans l’océan Arctique aux fins de monitorage et d’évaluation. Un aperçu des principales caractéristiques écologiques de ces GEM est donné. L’approche écosystémique est aussi développée nationalement : les initiatives de GÉ entreprises par les États-Unis et le Canada dans le cadre de leurs politiques nationales et plans d’actions pour les océans sont décrites. La zone étendue de gestion des océans (ZÉGO) de la mer de Beaufort établie pour les besoins de la gestion intégrée des océans a été prise comme étude de cas pour montrer comment le cadre national est mis en oeuvre au niveau subrégional au Canada. Puis, nous avons rassemblé l’information pertinente et comparé les deux cadres spatiaux, GEM et ZÉGO, qui se chevauchent dans les eaux canadiennes de la mer de Beaufort. Cette étude démontre que les deux approches appliquées à des niveaux complémentaires – régional (à la grandeur de l’Arctique) et subrégional (dans les eaux canadiennes de l’Arctique) – sont convergentes car elles sont basées sur les mêmes principes et critères, et visent le même but : considérer en premier lieu l’écosystème marin lors de la gestion des activités. Un cadre spatial à niveaux multiples, des outils de gestion basés sur la science et une structure de gouvernance sont maintenant disponibles pour la gestion dans la région pilote de la mer de Beaufort; il s’agit maintenant de mettre l’effort nécessaire pour rendre la GÉ opérationnelle et aborder les enjeux environnementaux complexes auxquels l’Arctique fait face