This paper examines the desirability of having an interim performance evaluation (IPE) in the design of an optimal contract. While enabling the principal to plan and control the project process better, the IPE may also adversely affect the agent's morale in case of unfavorable IPE outcome....

Feedback provision and salary administration are usually two indispensable purposes of conducting performance evaluations. However, the real role that performance feedback plays is affected by the availability of other appraisals that reveal information about the causes of performance. We...