Research suggests that employees work harder under penalty contracts than under economically equivalent bonus contracts. We build on this literature by examining how the motivational advantage of penalty contracts depends on a common aspect of real-world contracts: payoff ambiguity. With payoff ambiguity, employees provide effort without knowing how much pay they will receive for a given level of performance. According to our theory, this ambiguity opens the door for employee optimism, which has contrasting effects under each contract frame. Results from an experiment support this theory, with an increase in ambiguity leading to less employee effort with penalty contracts (as employees optimistically expect small penalties) and to more effort with bonus contracts (as employees optimistically expect large bonuses). We also find that these effects are stronger for more dispositionally optimistic employees. Overall, our results suggest that bonus contracts may be more motivating and penalty contracts less motivating than previously thought.

This paper presents a generic model for information security implementation in organizations. The model presented here is part of an ongoing research stream related to critical infrastructure protection and insider threat and attack analysis. This paper discusses the information security implementation case.

Distinguishing high-performing employees imposes choices on managers: Is recognition most effectively delivered publicly or privately? If delivered publicly, what setting is best? This paper broadens the accounting literature on the implications of these decisions. Via experiment, I examine how the social bond between recognized employees and those observing the recognition influences the effect of recognition visibility on employee behavior. I find that with weak social bonds, public recognition (versus private) does not result in more beneficial employee behavior. However, when social bonds are strong, employees provide greater pre-recognition effort and respond more positively to public recognition than to private recognition. Overall, my study supports the extensive use of public recognition in practice and helps clarify the collective results from prior accounting studies. My findings also have implications for implementing recognition programs - suggesting managers should consider employee relationships when deciding how and where to recognize their employees.

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