Publications [#267011] of Leslie M. Marx

Journal Articles

1. MacDonald, G; Marx, LM, Adverse specialization, Journal of Political Economy, vol. 109 no. 4 (January, 2001), pp. 864-899, University of Chicago Press [doi]
   (last updated on 2026/01/15)

   Abstract:
   We analyze a multiple-activity, principal-agent model in which the activities are naturally substitutable for the agent and complementary for the principal. A basic result is that the optimal compensation must cause the agent to view the activities as complements. This complementarity is achieved by employing a compensation scheme that is typically nonmonotone and makes success on multiple dimensions the sole source of large rewards. A number of empirical implications follow, along with explanations for some existing empirical findings. We also discuss applications to compensation in specific occupations.