Personnel Economics

Peter Kuhn is Professor of Economics at the University of California, Santa Barbara. He is well known for his research on the economics of trade unions, wage and employment discrimination, immigration, displaced workers, and personnel economics with a particular emphasis on behavioral economics.

This is a fantastic analysis of the nexus of the theory of personnel economics and the data from economic experiments.

• PART ONE: Principal-Agent Models Chapter 1: Structure of the Principal-Agent Problem 1.1 What Is a Principal-Agent Problem? 1.2 Components 1.3 Profits 1.4 Utility 1.5 The Contract 1.6 The Production Function 1.7 Backwards Induction Chapter 2: Solving the Agent's Problem 2.1 A Mathematical Solution 2.2 Comparative Statics 2.3 The Solution with Indifference Curves Chapter 3: Solving the Principal's Problem 3.1 Warm-Up Exercise: The Principal's Problem When A=03.2 The Full Solution to the Principal-Agent Problem3.3 Is It Crazy to "Sell the Job to the Worker"? Chapter 4: Best for Whom? Efficiency and Distribution4.1 Economically Efficient Contracts 4.2 Dividing the Pie: What's Feasible? Chapter 5: Extensions: Uncertainty, Risk Aversion and Multiple Tasks 5.1 Which Assumptions Matter? Which Ones Don't? 5.2 Uncertainty and Risk Aversion: State-Contingent Contracts 5.3 Optimal Non-Contingent Contracts 5.4 Evidence on the Insurance-Incentives Tradeoff: Sharecropping in the South5.5 Multi-Task Principal-Agent Problems 5.6 Nonlinear Incentives and the 'Timing Gaming' Problem Chapter 6: Noisy Performance Measures and Optimal Monitoring 6.1 A Simple Model of Shirking with Monitoring and Fines 6.2 Solving the Agent's Problem 6.3 Efficiency: The Pie-Maximizing Solution PART TWO: Evidence on Employee Motivation Chapter 7: Empirical Methods in Personnel Economics7.1 Inferring Causality: The Advantages of Randomized Controlled Trials (RCTs)7.2 Inferring Causality in Non-Experimental Settings: Regression Analysis Chapter 8: Performance Pay at Safelite Glass: Higher Productivity, Pay and Profits 8.1 Safelite's Performance Pay Plan (PPP) and Its Predicted Effects 8.2 How Did PPP Affect Employee Performance at Safelite? 8.3 Did the PPP Plan Raise Safelite's Profits? 8.4 Lessons from Safelite 8.5 Safelite 20 Years Later--An Epilogue Chapter 9: Some 'Non-Classical' Motivators 9.1 "Pay Enough or Don't Pay at All" 9.2 What's Meaningful Work Worth? Intrinsic Motivation and Image Motivation 9.3 "Large Stakes and Big Mistakes" 9.4 Are High States Really a Problem? The Role of Self-Selection 9.5 Reference Points: Evidence from the Lab 9.6 Reference Points: Evidence from the Workplace 9.7 Present Bias and Procrastination Chapter 10: Reciprocity at Work: Gift exchange, Implicit Contracts, and Trust 10.1 The Gift-Exchange Game (GEG) 10.2 Incomplete Contracts 10.3 Laboratory Evidence on Gift-Exchange Games 10.4 Intentions, Reference Points, and Positive versus Negative Reciprocity 10.5 Positive and Negative Reciprocity in the Field 10.6 Trust Can Pay: The Hidden Cost of Control 10.7 Fairness among Workers Chapter 11: Pigeons and Pecks: Incentives and Income Effects 11.1 The Backward-Bending Labor Supply Curve (BBLS) 11.2 Explaining the BBLS: The Role of Income Effects11.3 When Are Income Effects Likely to Be Important? 11.4 The Shape of the Utility Function and the Mathematics of Income Effects PART THREE: Employee Selection and Training Chapter 15: Choosing Qualifications 15.1 Optimal Worker Mix When Workers Work Independently 15.2 Optimal Worker Mix When Workers Interact in the Production Process Chapter 16: Risky versus Safe Workers 16.1 A Baseline Example: Risky Workers and the Principle of Option Value 16.2 Changing Assumptions: When Are Risky Workers The Better Bet? Chapter 17: Recruitment: Selecting Individual Workers 17.1 Whether to 'Go Fishing': Formal Versus Informal Channels; Internal Versus External Candidates 17.2 How Wide a Net to Cast? Searching Narrowly Versus Broadly 17.3 Choosing From the Pool: Testing, Discretion, and Self-Selection 17.4 Avoiding Bias Chapter 18: Setting Pay Levels 18.1 "Optimal Exploitation": Pay Levels and the Elasticity of Labor Supply 18.2 Does It Really Matter What You Pay? Finding a Pay Level Niche 18.3 High Pay as a Worker Discipline Device: Efficiency Wage Models18.4 Effects of Pay Levels on Worker Selection and Motivation: Evidence 18.5 Deferred Compensation as an Incentive and Retention Tool Chapter 19: Training 19.1 When to Train? An Education Example 19.2 Training in Firms: When Is it Efficient? 19.3 Training in Firms: Who Should Pay? 19.4 Firm-Specific Training and the Holdup Problem 19.5 Costs and Benefits of Multiskilling PART FOUR: Competition in the Workplace--The Economics of Relative Rewards Chapter 20: A Simple Model of Tournaments 20.1 The Basic Elements of a Two-Player Tournament 20.2 Effort and the Probability of Winning the Promotion 20.3 The Agents' Problem: Optimal Individual Effort, Given the Contest Rules 20.4 Efficiency: Which Effort Levels Maximize the Size of the Pie? 20.5 Achieving Efficiency with the Optimal Tournament 20.6 A Theorem: The Equivalence of Tournaments and Piece Rates 20.7 Some Extensions: Many Players, Prizes and Stages 20.8 Tournaments with Risk-Averse Agents 20.9 Relative Pay Schemes in Action: The Market for Broilers Chapter 21: Some Caveats: Sabotage, Collusion, and Risk-Taking in Tournaments 21.1 Helping and Sabotage in Tournaments 21.2 Collusion in Tournaments 21.3 Tournaments and Risk-Taking Chapter 22: Unfair and Uneven Tournaments 22.1 Effort and the Probability of Winning the Tournament 22.2 Evidence on Asymmetric Tournaments: The Tiger Woods Effect22.3 Addressing Ability Differences in Tournaments: Leagues, Handicaps, and Affirmative Action 22.4 Ability Differences in Multistage Contests and Promotion Ladders Chapter 23: Who Wants to Compete? Selection into Tournaments 23.1 Ability, Risk Aversion, and Tournament Entry 23.2 Gender, Confidence, and Competitiveness PART FIVE: Teams Chapter 24: Incentives in Teams and the Free-Rider Problem 24.1 Some Definitions 24.2 Efficiency: Which Effort Levels Maximize the Size of the Pie? 24.3 Sharing Rules and the Free-Rider (1/N) Problem 24.4 Group Piece Rates, Group Bonuses, and Free-Riding in Teams Chapter 25: Team Production in Practice 25.1 Altruistic Punishment and Team Performance 25.2 Can Team-Based Pay Outperform Individual Pay? Peer Pressure on Campus 25.3 Team Incentives In A Garment Factory: Why So Successful? Chapter 26: Complementarity, Substitutability, and Ability Differences in Teams 26.1 Complementarity and Substitutability: Definitions and Evidence 26.2 Team Effort Choices under Extreme Complementarity 26.3 Team Effort Choices under Moderate Complementarity 26.4 Team Effort Choices under Substitutability 26.5 Effort, Ability Differences, and Optimal Team Size Chapter 27: Choosing Teams: Self-Selection and Team Assignment 27.1 Who Wants To Join Teams? Ability Differences and Self-Selection 27.2 Skill Diversity, Information Sharing, and Team Performance