Marchegiani, Lucia; Reggiani, Tommaso; Rizzolli, Matteo - Institute for the Study of Labor (IZA) - 2011
In our simple model the supervisor: i) cannot observe the agent's effort; ii) aims at inducing the agent to exert high effort; but iii) can only offer rewards based on performance. Since performance is only stochastically related to effort, evaluation errors may occur. In particular, deserving...