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John G Sessions and John D Skatun
''A bonus given: noise, effort and efficiency in a flat hierarchy''
( 2019, Vol. 39 No.4 )
We show that bonuses are efficient in terms of effort exertion and greater in noisier environments. This could explain the prevalence of bonuses in the financial sector, which is characterised by flat hierarchies and inherently noisy environments. Policies to restrict bonuses should be implemented cautiously since they may imply undesirable efficiency effects.
Keywords: Bonuses. Banks
JEL: J3 - Wages, Compensation, and Labor Costs: General
Manuscript Received : Jun 28 2019 Manuscript Accepted : Nov 12 2019

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