Incentives at Work

This thesis explores how incentive mechanisms shape behaviour in different settings. Contained within are contributions to economic theory as well as field experiments testing theory. Theoretically optimal incentive schemes when measured performance is imperfectly related to actual performance is studied in two different ways. First, I consider the case in which measured performance is more coarse than actual performance. Second, I study the case in which a worker is evaluated by both a biased manager and a biased performance measure. In the field experiments the effect of changes in the incentive structure in real world settings are studied. First, I study how a team incentive affects team performance and the assignment of tasks within teams. Finally, I study how students respond when they are asked to set goals and are encouraged to raise their goal.