Social interaction with colleagues is an important job attribute for many workers. To attract and retain workers, managers therefore need to think about how to create and preserve high-quality co-worker relationships. This paper develops a principal-multi-agent model where agents do not only engage in productive activities, but also in social interaction with their colleagues, which in turn creates co-worker altruism. We study how financial incentives for productive activities can improve or damage the work climate. We show that both team incentives and relative incentives can help to create a good work climate. We discuss some empirical evidence supporting these predictions.

altruism, co-worker satisfaction, incentive contracts, social interaction
Economics of Contract Law (jel D86), Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets (jel J41), Personnel Economics: General (jel M50)
Tinbergen Institute
Tinbergen Institute Discussion Paper Series
Discussion paper / Tinbergen Institute
Tinbergen Institute

Dur, A.J, & Sol, J. (2008). Social Interaction, Co-Worker Altruism, and Incentives (No. TI 2008-094/1). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from