Kapoor, S. (2018). Inefficient Incentive Provision in Multitask Jobs: Experimental Evidence from Big-Box Restaurants (Revise and Resubmit). Journal of Economics and Management Strategy.

Contract theory typically assumes that principals select the most profitable yet feasible contract. This article uses experimental evidence from large-scale restaurants to evaluate whether this assumption applies to the customary contract in the industry. The field experiment pays waiters bonuses for the number of customers they serve, in addition to the tips and hourly wages they customarily receive. Workers earn 10 percent more under this alternative contract, because of the bonuses, and because they earn more in tips. The firm earns at least 49 percent more profit in the short run. There is no discernible reduction in long-run profit. Even after acknowledging the material gains from the alternative, and months of evidence, the firm reverted to the customary contract. The article explores rationales for why this was the case.