Essays on incentives for innovation
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2009.
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| Format: | Thesis |
| Language: | eng |
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Massachusetts Institute of Technology
2009
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| Online Access: | http://hdl.handle.net/1721.1/49709 |
| _version_ | 1811091526878494720 |
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| author | Ederer, Florian Peter |
| author2 | Robert Gibbons and Bengt Holmström. |
| author_facet | Robert Gibbons and Bengt Holmström. Ederer, Florian Peter |
| author_sort | Ederer, Florian Peter |
| collection | MIT |
| description | Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2009. |
| first_indexed | 2024-09-23T15:03:47Z |
| format | Thesis |
| id | mit-1721.1/49709 |
| institution | Massachusetts Institute of Technology |
| language | eng |
| last_indexed | 2024-09-23T15:03:47Z |
| publishDate | 2009 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/497092019-04-12T23:29:45Z Essays on incentives for innovation Ederer, Florian Peter Robert Gibbons and Bengt Holmström. Massachusetts Institute of Technology. Dept. of Economics. Massachusetts Institute of Technology. Dept. of Economics. Economics. Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2009. Includes bibliographical references (p. 153-158). This thesis consists of three independent essays that examine the role of incentives for innovation in organizations. Chapter 2 studies the provision of incentives when workers explore new work methods in parallel. In such a setting under-exploration may result as workers attempt to free-ride on the new ideas of co-workers. Optimal incentives for routine activities take the form of standard pay-for-performance where only individual success determines compensation while optimal incentives for parallel innovation tolerates early failure and provides workers with long-term group incentives for joint success. Using data from a controlled laboratory experiment I show that this link between incentives and innovation is causal. Innovation success and performance is highest under a group incentive scheme that rewards long-term joint success. In Chapter 3 which is co-authored with Gustavo Manso, I provide evidence that the combination of tolerance for early failure and reward for long-term success is effective in motivating innovation. Subjects under such an incentive scheme explore more, get closer to discovering the optimal business strategy, and produce higher average revenues than subjects under fixed-wage and standard pay-for-performance incentive schemes. I also show that the threat of termination can undermine incentives for innovation, while golden parachutes can alleviate these innovation-reducing effects. Finally, in Chapter 4, I investigate the choice of organizations to conduct interim performance evaluations. (cont.) When ability does not influence workers marginal benefit of effort, the choice between giving workers feedback or not depends on the shape of the cost of effort function. However, when effort and ability are complementary, feedback policies have several competing effects. They inform workers about their relative position in the tournament as well as their relative productivity. In addition, performance appraisals create signal-jamming incentives to exert effort prior to performance evaluation. by Florian Peter Ederer. Ph.D. 2009-11-06T16:23:12Z 2009-11-06T16:23:12Z 2009 2009 Thesis http://hdl.handle.net/1721.1/49709 436454253 eng M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 158 p. application/pdf Massachusetts Institute of Technology |
| spellingShingle | Economics. Ederer, Florian Peter Essays on incentives for innovation |
| title | Essays on incentives for innovation |
| title_full | Essays on incentives for innovation |
| title_fullStr | Essays on incentives for innovation |
| title_full_unstemmed | Essays on incentives for innovation |
| title_short | Essays on incentives for innovation |
| title_sort | essays on incentives for innovation |
| topic | Economics. |
| url | http://hdl.handle.net/1721.1/49709 |
| work_keys_str_mv | AT edererflorianpeter essaysonincentivesforinnovation |