What question did this study set out to answer?

The aim is to explore the existing theories and empirical findings related to incentive provision in firms.

The Provision of Incentives in Firms

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This overview analyzes pay-for-performance incentives in firms, suggesting gaps in theory and practice.

The aim is to explore the existing theories and empirical findings related to incentive provision in firms.
Reviews various types of pay-for-performance models such as piece rates and promotions.
Analyzes empirical work on the effectiveness of incentive structures.
Examines the challenges in measuring output linked to incentive plans.
Evidence indicates individuals do respond to pay-for-performance incentives.
Contracts often do not align with theoretical predictions regarding incentive structures.
Limited progress in distinguishing between various incentive theories and challenges in measuring output remains.

Canice Prendergast (1999) studied this question.

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