Abstract

http://ssrn.com/abstract=2407096
 


 



Killing Conscience: The Unintended Behavioral Consequences of 'Pay For Performance'


Lynn A. Stout


Cornell Law School - Jack G. Clarke Business Law Institute

March 10, 2014

(Forthcoming) Journal of Corporation Law, Vol. 39, Issue 1
Cornell Legal Studies Research Paper No. 14-06

Abstract:     
Contemporary lawmakers and reformers often argue that ex ante incentive contracts providing for large material rewards are the best and possibly only way to motivate corporate executives and other employees to serve their firms’ interests. This Article offers a specific critique of the “pay for performance” approach. In particular, it explores why, for a variety of mutually-reinforcing reasons, workplaces that rely on ex ante incentive contracts suppress unselfish prosocial behavior (conscience) and promote selfishness and opportunism. The end result may be not more efficient employee behavior, but more uncooperative, unethical, and illegal employee behavior.

Number of Pages in PDF File: 42

Keywords: incentive contracts, compensation, performance, ethics, prosocial behavior, corporate executives

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Date posted: March 12, 2014  

Suggested Citation

Stout, Lynn A., Killing Conscience: The Unintended Behavioral Consequences of 'Pay For Performance' (March 10, 2014). (Forthcoming) Journal of Corporation Law, Vol. 39, Issue 1; Cornell Legal Studies Research Paper No. 14-06. Available at SSRN: http://ssrn.com/abstract=2407096

Contact Information

Lynn A. Stout (Contact Author)
Cornell Law School - Jack G. Clarke Business Law Institute ( email )
524 College Ave
Myron Taylor Hall
Ithaca, NY 14853
United States
607-255-8431 (Phone)
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