ESSAYS IN ORGANIZATIONAL ECONOMICS WITH SOCIAL PREFERENCES

Date

2026-2-13

Author

Ayhan, Rengin Meryem

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This thesis studies incentive provision in multi-agent environments with other-regarding agents and informational frictions. The essays focus on which contract aligns incentives most efficiently under behavioral and informational constraints. The first essay examines alternative contract types — team, relative performance, and independent —in a three-layer hierarchy. The contract types are analyzed under three monitoring regimes: no-supervisor, a truth-telling supervisor, and a collusion-proof supervisor. The results show that when output signals are noisy, supervision is adequate, or agents are highly inequity-averse, the team contract reduces the adverse effect of inequity among agents. In contrast, when success probability is high, supervisor monitoring is inefficient, or agents are status-seeking, relative performance contracts dominate. Independent contracts occur when the team wage equals the relative wage and serve as a benchmark. The second essay establishes a bonus pool (pie-sharing) among multiple agents with different allocation mechanisms: discretionary, peer, and supervisor allocation, with imperfect monitoring and favoritism. The findings emphasize that discretionary allocation becomes efficient when agents are either status-seekers or tolerant of being ahead. In contrast, when they are strongly other-regarding, peer allocation delivers incentives with fewer monetary rewards; however, it is prone to misclassification. The supervisor allocation scheme also suffers from the risk of misclassification and favoritism. When monitoring noise is low, incentive costs are stable for different degrees of social preferences. As signals become less informative, the responsiveness of behavioral traits becomes limited. In addition, while status-seeking preferences align with favoritism, this scheme is more costly when agents are strongly other-regarding.

Subject Keywords

Incentive Design, Moral Hazard, Other Regarding Preferences, Bonus Pool Allocation, Multi-agent Contracts

URI

https://hdl.handle.net/11511/118430

Collections

Graduate School of Social Sciences, Thesis