Pau Milan

Thematic seminars
Economic theory seminar

Pau Milan

Universitat Autònoma de Barcelona
Incentive Contracts and Peer Effects in the Workplace
Joint with
Nico Davila

IBD Salle 16

Îlot Bernard du Bois - Salle 16

5-9 boulevard Maurice Bourdet
13001 Marseille

Friday, April 19 2024| 12:00pm to 1:00pm

Gaëtan Fournier: gaetan.fournier[at]


Risk-averse workers in a team exert effort to produce joint output. Workers' incentives are connected via chains of productivity spillovers, represented by a network of peer-effects. We study the problem of a principal offering wage contracts that simultaneously incentivize and insure agents. We solve for the optimal linear contract for any network and show that incentives are loaded more heavily on central workers. We summarize how peer networks define firms' profits by linking profits to spectral properties of the complementarity network. We show that when firms can't personalize contracts, better connected workers extract rents. In this case, a group composition result follows: large within-group differences in centrality can decrease firms' profits.