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Relational Incentive Contracts and Performance Measurement

Chi, Chang-Koo - 2018

This paper analyzes relational contracts under moral hazard. We first show that if the available information (signal) about effort satisfies a generalized monotone likelihood ratio property, then irrespective of whether the first-order approach (FOA) is valid or not, the optimal bonus scheme...

Persistent link: https://www.econbiz.de/10012920164

Balanced Scorecards : A Relational Contract Approach

Kvaløy, Ola; Olsen, Trond E. - 2020

) specification, the efficiency of the contract improves with higher precision of the index measure, since this strengthens incentives … verifiable performance measures in the relational index contract in order to improve incentives …

Persistent link: https://www.econbiz.de/10014032096

Optimal Delegation Under Unknown Bias : The Role of Concavity

Tanner, Noam - 2019

A principal is uncertain of an agent's preferences and cannot provide monetary transfers. The principal, however, does control the discretion granted to the agent. In this paper, we provide a simple characterization of when it is optimal for the principal to screen by offering different terms of...

Persistent link: https://www.econbiz.de/10012894211

Optimal sequential delegation

Kovác, Eugen; Krähmer, Daniel - 2013

The paper extends the optimal delegation framework pioneered by Holmström (1977, 1984) to a dynamic environment where, at the outset, the agent privately knows his ability to interpret decision relevant private information received later on. We show that any mechanism can be implemented by a...

Persistent link: https://www.econbiz.de/10010198973

Bait contracts

Vierø, Marie-Louise - 2009

; optimism ; incentives ; signals ; stock options …

Persistent link: https://www.econbiz.de/10003872451

Transparency and Performance Evaluation in Sequential Agency

Cato, Susumu - 2017

This study investigates the effects of transparency in a sequential moral hazard problem, where a leader and a follower consecutively take an action. The principal chooses whether the organization is transparent or opaque, by which we mean that the action of the leader is observable to the...

Persistent link: https://www.econbiz.de/10012971291

Teams in Relational Contracts

Kvaloy, Ola - 2016

size and team composition as instruments in order to improve incentives. In particular, the principal can strengthen the … agents' incentives by composing teams that utilize stochastic dependencies between the agents' outputs. We also show that … more agents in the team may under certain conditions increase each team member's effort incentives, in particular if …

Persistent link: https://www.econbiz.de/10012977358

Wage bargaining when workers have fairness concerns : conference paper

Gogova, Martina Nikolaeva; Kragl, Jenny - 2013

We analyze optimal labor contracts when the worker is inequity averse towards the employer. Welfare is maximized for an equal sharing rule of surplus between the worker and the firm. That is, profit sharing is optimal even if effort is contractible. If the firm can make a take-it-or leave-it...

Persistent link: https://www.econbiz.de/10010341624

Psychological incentives, financial incentives, and risk attitudes in tournaments : an artefactual field experiment

Cadsby, Charles Bram; Engle-Warnick, Jim; Fang, Tony; … - 2014

Persistent link: https://www.econbiz.de/10011283941

Psychological incentives, financial incentives, and risk attitudes in tournaments : an artefactual field experiment

Cadsby, Charles Bram; Engle-Warnick, Jim; Fang, Tony; … - 2015

comparison group in China, we examine how both psychological and financial incentives, together with attitudes toward risk, may … rank-based financial incentives. Our results show that performance-ranking information had a significant motivational … effect on average performance for students, but not for that of workers. Adding financial incentives based on rank provided …

Persistent link: https://www.econbiz.de/10011407820