Abstract

Compensation schemes play a significant role in explaining employee behavior. However, the recent financial crisis provides many examples where compensation schemes created perverse incentives that favored short-run gains at the expense of long-run viability. The penalties paid, as well as, the amount of attention given to misdeeds by employees has renewed interest in the need for corporate culture to encourage proper conduct. A weakness with this approach is that corporate culture depends on shared knowledge. Decisions to keep silent challenge the efficacy of norms as widely shared rules of conduct that corporate culture attempts to inculcate. Our main conclusion is that in the presence of decisions to keep silent that are unnoticed by others the rightness of ideas cannot be effectively handed out on the part of the social environment of the firm. In searching for a remedy, the incentive applications associated with digital tokens merit serious consideration.