Given a standard moral hazard problem, the agent's optimal compensation can be cast as a function of either (i) the gross outcome, or (ii) the net outcome, which is the gross outcome net of the agent's compensation. Contracts based on the net outcome are important in practice because (i)...

We consider a principal-multi agent model that features a three-tier hierarchy, defined as a setting where the principal contracts with an agent-manager and delegates to the manager some authority to contract with other agents. A key highlight is that incentive compensation, performance...

In the empirical estimation of the relation between CEO pay and both firm and peer performance, researchers typically include conventional accounting-based measures that reflect firm performance net of executive pay expense. We analytically show that when firms evaluate CEO performance relative...

We study team design in the presence of career concerns. In the model, the agents have explicit effort incentives from performance-dependent compensation contracts and implicit effort incentives from career concerns. With uniform teams, the principal assigns agents with similar career concerns...

In this paper, we analyze the impact of organizational structure on incentives within a LEN-framework with agents on three hierarchical levels (bottom, middle, top), where the performance measures used for incentive design originate at the bottom-level. Previous literature has shown that with...