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  4. Fall 1998
  5. Incentives in Organizations

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Incentives in Organizations

  • Robert Gibbons
Journal of Economic Perspectives
vol. 12, no. 4, Fall 1998
(pp. 115–132)
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Abstract

In this paper, the author summarizes four new strands in agency theory that help him think about incentives in real organizations. As a point of departure, The author begins with a quick sketch of the classic agency model. He then discusses static models of objective performance measurement that sharpen Kerr's argument; repeated-game models of subjective performance assessments; incentives for skill development rather than simply for effort; and incentive contracts between versus within organizations. The author concludes by suggesting two avenues for further progress in agency theory: better integration with organizational economics, as launched by Coase (1937) and reinvigorated by Williamson (1975, 1985), and cross-pollination with other fields that study organizations, including industrial relations, organizational sociology, and social psychology.

Citation

Gibbons, Robert. 1998. "Incentives in Organizations." Journal of Economic Perspectives, 12 (4): 115–132. DOI: 10.1257/jep.12.4.115

JEL Classification

  • D23 Organizational Behavior; Transaction Costs; Property Rights
  • L14 Transactional Relationships; Contracts and Reputation; Networks
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