contracts which determine their managers' salaries. One contract simply gives managers incentives to maximize firm profits …, while the second contract gives an additional sales bonus. Although theory predicts the second contract to be chosen, it is … only rarely chosen in the experimental markets. This behavior is rational given that managers do not play according to the …

Modern 'principal-agent theory' has made a lot of progress in proposing theoretical Solutions to agency problems. This … evidence on offered contracts and effort choices in a simple agency game. In line with principal-agent theory we find that in … design has to regard an equity constraint that has so far been neglected by contract theory. In fact, most contract offers …

that compensation contracts in public corporations seem imperfectly tied to firm performance and managers' tasks. …There is common consensus that managerial compensation is strongly tied to firm size and much less so to financial … performance elasticities are contrary to predictions of agency theory. Both results provide further support to the common belief …