Charity, incentives, and performance

Martin Holmén, Oege Dijk

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review

Abstract

Many companies spend substantial resources to be viewed as socially responsible. We argue that one reason firms do this is to create a warm glow about the firm in order to affect employee behavior. This proposition is tested with an incomplete contract principal-agent laboratory experiment where warm glow principals make donations to charity. The results show that both principals and agents have higher earnings in treatments where principals are working on behalf of a charity. Only in the charity treatments do agents respond to the effort levels suggested by the principals, and do higher requested levels of effort result in higher principal earnings.
Original languageEnglish
Title of host publicationWestern Economic Association Meeting
Publication date2012
Publication statusPublished - 2012
MoE publication typeA4 Article in conference proceedings
EventWestern Economic Association Meeting - San Fransisco, United States
Duration: 29.06.201203.07.2012

Keywords

  • 511 Economics

Cite this

Holmén, M., & Dijk, O. (2012). Charity, incentives, and performance. In Western Economic Association Meeting