Delfgaauw, Josse; Souverijn, Michiel - Tinbergen Instituut - 2014
When verifiable performance measures are imperfect, organizations often resort to subjective performance pay. This may … towards specific tasks. We show that subjective performance pay based on evaluation by a biased supervisor has the same … distorting effect on the agent's effort allocation as incentive pay based on an incongruent performance measure. If the principal …