Information Effects on Optimal Performance Evaluations : Multiple Agents

This study analyzes the impacts of information on relative performance evaluations and the efficiency of accounting information systems for agencies in which multiple agents individually exert efforts confronting correlated uncertainties. When a public signal provides garbled information of an employee’s uncertainty, the signal gives information for others’ uncertainties as well through the correlations between uncertainties. However, the impacts of information from a public signal on employees’ optimal performance evaluations are not symmetric to the extent of the increases in information. Information from a public signal reduces the values of the peer performances and improves the efficiency of the accounting information systems for the employees whose uncertainties directly receive information while having no impacts to the optimal performance evaluations of others whose uncertainties indirectly receive information through the correlations between uncertainties