Experimental Research On Principal-agent Model Based On Regulatory Focus Theory

Nowadays,the “frequent resignation” of post-90 s employees seems to be a common phenomenon in the workplace.The survey data of a recruitment platform show that team atmosphere,leadership style,work reward and salary are the main reasons for "frequent resignation".Most economists believe that external incentives will optimize the behavior of agents and significantly improve the level of efforts and performance of the agents.However,with the development of experimental economics,more and more experiments show that external incentives,especially economic incentives,will undermine the intrinsic motivation of the parties.For example,the parties have psychological preferences such as fair preference,moral norms,caring for the weak and so on.External incentives can not produce the effect of promotion,instead,they stimulate the opposite behavior of the parties.So,research on the effect of incentive should consider the limited rationality of the parties.That is to pay attention to the factors of both parties' psychological factors.Based on the classic principal-agent experimental model,and the trust contract,bonus incentive contract and penalty incentive contract are designed.With the help of regulatory focus theory,the validity of contract incentive is studied.Regulatory focus theory distinguishes two ways of self-regulation style.Promotion focus is sensitive to promotion and positive information.Prevention focus is sensitive to safety and losses information.Bonus incentive provide a gain/non gain working environment and start the promotion focus;penalty incentive provide a loss /non loss working environment and start the prevention focus.In recent years,more and more research has applied regulatory focus theory to work environment.For example,the individual regulatory focus will affect the employee's work mood,job performance,and even manager's management style.From the perspective of principals and agents,we can sort out the conclusion:?For the principals: whether in the trust contract treatment or the bonus incentive treatment,promotion focus principals tend to design more reasonable contracts,effectively play the role of incentives,and increase their own revenue.Although under the penalty incentive,promotion focus principals and prevention focus principals adopt different strategies and contract design methods,in the end there is no significant difference between the two types of principals' income.?For the agents: With incentive from bonus,there are significant differences between the the two types of agents.Such as level of effort,revenue per round,and actual bonus.By the way,Bonus incentive will be more useful for prevention focus agents.Economic development is changing rapidly in china.Post-90 s,as a new generation,they have become the most concerned group in enterprises.However,managers are mostly older generation,and their psychological motivation tends to prevention focus.The contract which designed by prevention focus managers can not effectively motivate post-90 agents.Therefore,the enterprise managers should avoid use the contract design ideas which they tend to,and should try to adapt the management style of the promotion focus individuals.In addition,the bonus incentive contract for the agents can effectively alleviate the agents' rejection of the contract.So in real life,credible bonus incentive can effectively alleviate the post-90 s employees' "frequent resignation" phenomenon.