... effort and performance for penalties than for bonuses. Second, we find that the marginal sensitivity of penalties diminishes faster than that of bonuses, indicating that the marginal effect of a bonus may eventually exceed that of a penalty as their value increases. Third, we find an undesirable...

... the performance target is set at a very challenging level. My results suggest that companies should be aware of the potential undesirable consequences of using bonus or penalty framing and should design complementary control elements accordingly. For example, when companies use bonuses, their controls should...

... induced by the wording of the bonus contract. Second, Luft posits that there are different nonmonetary benefits associated with bonus and penalty wording that affect agent preferences. Bonuses are associated with praise and reward, while penalties are associated with condemnation and disapproval...