@article{Marino:273583,
      recid = {273583},
      author = {Marino, Anthony and Zabojnik, Jan},
      title = {Work-Related Perks, Agency Problems, and Optimal Incentive  Contracts},
      address = {2006-10},
      number = {2110-2018-4232},
      series = {Working Paper No. 1107},
      pages = {42},
      year = {2006},
      abstract = {This paper examines the effects of work-related perks,  such as corporate jets and limousines, nice offices,  secretarial staff, etc., on the optimal incentive contract.  In a linear contracting framework, perks characterized by  complementarities between production and consumption  improve the trade-off between incentives and insurance that  determines the optimal contract for a risk-averse agent. We  show that (i) the perk may be offered even if its direct  consumption and productivity benefits are offset by its  cost; (ii) the perk will be offered for free; (iii) agents  in more uncertain production environments will receive more  perks; (iv) senior executives should receive both more  perks and stronger explicit incentives; and (v) better  corporate governance can lead firms to award their CEOs  more perks. Our analysis also offers insights into the  firms’ decisions about how much autonomy they should grant  to their employees and about optimal perk provision when  managers and workers are organized in teams.},
      url = {http://ageconsearch.umn.edu/record/273583},
      doi = {https://doi.org/10.22004/ag.econ.273583},
}