Skip to main content

Research Repository

Advanced Search

Employee incentives: bonuses or penalties?

Nosenzo, Daniele


Daniele Nosenzo


Firms regularly use incentives to motivate their employees to be more productive. However, often little attention is paid to the language used in employment contracts to describe these incentives. It may be more effective to present incentives as entitlements that can be lost by failing to reach a performance target, rather than as additional rewards that can be gained by reaching that target. However, emphasizing the potential losses incurred as a result of failure may entail hidden costs for the employer, as it may damage the trust relationship between a firm and its employees.


Nosenzo, D. (2016). Employee incentives: bonuses or penalties?.

Journal Article Type Article
Publication Date Jan 26, 2016
Deposit Date Apr 6, 2016
Publicly Available Date Apr 6, 2016
Journal IZA World of Labor
Electronic ISSN 2054-9571
Peer Reviewed Peer Reviewed
Volume 2016
Issue 234
Keywords employee motivation, bonuses, penalties, loss aversion, contract framing
Public URL
Publisher URL


Downloadable Citations