Perks are a commodity bundle offered by an employer to an employee. We provide two
dynamic models. First, we assume non-separable utility function between effort and both of
a perk good and money, extending Bennardo, Chiappori and Song (2010). There are two
forces affecting the incentive compatibility constraint: higher promised utility makes the
incentive compatibility constraint more binding, and if the higher promised utility is too
costly then a principal may reduce the implemented effort. When the first effect is stronger
than the second, the principal gives more perk good as successful outcomes accumulate. In
the second model, an agent can save money privately (i.e. hidden saving), but not a perk
good. Increasing monetary payment today makes it more difficult to satisfy the today’s
hidden saving constraint, but makes it easier to satisfy the yesterday's hidden saving
constraint. When the second effect is larger than the first, the principal gives more perk as
successful outcomes accumulate.