The Provision of Incentives in Firms

  title={The Provision of Incentives in Firms},
  author={Canice Prendergast},
  journal={Journal of Economic Literature},
This paper provides an overview of the existing theoretical and empirical work on the provision of incentives. It reviews the costs and benefits of many types of pay-for-performance, such as piece rates, promotions, and long-term incentives. The main conclusions are (i) while there is considerable evidence that individuals respond to pay-for-performance, there is less evidence that contracts are designed as predicted by the theory, (ii) there has been little progress made in distinguishing… 

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