@TechReport{iza:izadps:dp3077,
            	author={Schnedler, Wendelin},
            	title={You Don't Always Get What You Pay For},
            	year={2007},
	month={Sep},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={3077},
            	url={https://www.iza.org/index.php/publications/dp3077},
	abstract={Consider a principal-agent relationship in which more effort by the agent raises the likelihood of success. Does rewarding success, i.e., paying a bonus, increase effort in this case? I find that bonuses have not only an incentive but also an income effect. Overall, bonuses paid for success may well reduce effort and hence the probability of success. I also identify conditions under which the income effect dominates the incentive effect, and single out the hazard-rate of effort as a crucial determinant of this trade-off.},
	keywords={moral hazard;bonus;premium;incentives;income effect},
            }