employee\'s performance was poor. The justification assures the employee that the manager has not distorted the evaluation …? Suppose a manager\'s evaluation is private information. Justifying her evaluation is costly but limits the principal\'s scope … for distorting her evaluation of the employee. I show that the manager justifies her evaluation if and only if the …

This paper addresses the question, what metrics should be used for performance evaluation and in particular how they …

principal is ambiguity averse, and designs a contract which is robust to the worst case effort cost process. Ambiguity divides … the contract into two regions. After sufficiently high performance, the agent reaches the over-compensation region, where … he receives excessive benefits compared to the contract without ambiguity, while after low performance, he enters the …

theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we … optimal contract. This result is robust to alternative assumptions about the level of CEO risk-aversion and the disutility … associated with their effort. In a supplementary analysis, we solve for the optimal contract when there are no restrictions on …

exponential utility and cost of effort, each separating renegotiation-proof contract is characterized by a single sensitivity … parameter, which determines how the agent's promised utility varies with reported cash flows. The optimal contract among those …