The Composition of Compensation Policy: From Cash to Fringe Benefits
Annals of Economics and Statistics, 101-102: 307-326.
Posted: 9 Mar 2008 Last revised: 11 Dec 2013
Date Written: 2011
We develop a Principal-Agent model to analyze the optimal composition of the compensation policy with both monetary and nonmonetary incentives. We characterize nonmonetary benefits as symbols to capture a large set of non-wage compensations such as fringe benefits, status, identity (or self-image) or even sanctions. We characterize the optimal composition of the compensation policy when the Principal fully or imperfectly knows the Agent's preferences
Keywords: Fringe benefits, Non-Monetary Incentives, Perquisites
JEL Classification: M52
Suggested Citation: Suggested Citation