In this research we show that managerial bonuses can be a way of reducing tariffs while keeping domestic welfare high. For this we analyze all types of bonuses based on pure profit, sales, relative profit and market share. We prove that for the domestic country encouraging the domestic firm to...

Companies employ managers for either practical, legal or administrative reasons. However, no matter what the reason, the good performance of managers and the success of companies are vital elements for firms. At this point, managerial incentives play a key role. In this paper, we use the VFJS...

Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide some justifications by sending a costly message. Indeed, it is optimal for the principal to explain her evaluation to the agent if and only if the...

Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide justification by sending a costly cheap-talk message. I show that the principal explains her evaluation to the agent if the evaluation turns out to be...

Incentives often distort behavior: they induce agents to exert effort but this effort is not employed optimally. This paper proposes a theory of incentive design allowing for such distorted behavior. At the heart of the theory is a trade-off between getting the agent to exert effort and ensuring...

We present a model in which a motivator can take costly actions - or what we call motivational effort - in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the...

We present a model in which a motivator can take costly actions - or what we call motivational effort - in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the...

This paper addresses the question, what metrics should be used for performance evaluation and in particular how they should be weighted and combined in the presence of technological interdependencies when the agents exhibit variedly strong developed rivalry. We find that the principal reacts to...

It is often suggested that incentive schemes under moral hazard can be gamed by an agent with superior knowledge of the environment and that deliberate lack of transparency about the incentive scheme can reduce gaming. We formally investigate these arguments in a two-task moral hazard model in...

We study a continuous-time model of partnership, with persistence and imperfect state monitoring. Partners exert private efforts to shape the stock of fundamentals, which drives the pro ts of the partnership, and the profits are the only signal they observe. The near-optimal strongly symmetric...