Managerial workaholism, competition and incentives

The dissertation has two chapters. In "Managerial Workaholism and Incentives" I examine the implications of managerial workaholism in the case of a monopoly. There are two types of managers, workaholic and normal. When the principal is a profit maximizing firm, the workaholic is assigned more office time than the normal and spends the entire vacation time working. On average the workaholic is paid less than the normal. The firm either hires both types of managers or, if the reservation utility is large enough, only the workaholic. A firm in a society with a higher probability of workaholism has a bigger expected profit than a firm in a lower probability of workaholism society. If both types of managers participate, a workaholic in a society with a larger probability of workaholism is worse off relative to one in a lower probability of workaholism society while a normal has the same utility in either society. If only the workaholic participates, he has the same utility in either society. In case the principal is a social planner, the firm has an expected profit at least as big in a society with a larger probability of workaholism compared to a society with a lower probability of workaholism. In case both manager types participate, both a workaholic and a normal in a higher probability of workaholism society are strictly worse off than their correspondents in a society with a lower probability of workaholism. In case only the workaholic participates, he gets the same utility in either society.;In "Managerial Workaholism and Competitive Markets" I analyze managerial workaholism under competition a la Rothschild and Stiglitz [1976]. There exist separating Nash equilibria where either both types of managers participate, or, if the reservation utility is large enough, only workaholics participate. Firms make zero expected profit from either type of manager. The workaholics are assigned no vacation time by firms and put more effective hours worked, produce more output and are overall paid more. There exists no pooling Nash equilibrium due to "cream skimming" (Rothschild and Stiglitz [1976]). There are two types of Wilson equilibria: the separating one above and the zero expected profit incentive compatible pooling contract most preferred by the normals. The pooling equilibrium's transfer is in between the separating transfers of the two types and the pooling equilibrium vacation time is the same as the separating vacation time of the normals. There exists only a Riley (reactive) equilibrium identical to the separating equilibrium described above.