This note demonstrates how performance measure congruity and noise determine an agency’s total surplus within an linear agency framework with multiple tasks. It provides a decomposition of agency costs, leading back to a congruity index previously proposed in the literature. In addition,...

We develop and test experimentally a theoretical model of the role of self-esteem, generated by private feedback regarding relative performance, on the behavior of agents working on an effort provision task for a flat wage. Agents work harder and expect to rank better when they are told they may...

Analysts make competing claims about when and how politicians can use fear to gain support for suboptimal policies. Using a model, we clarify how common attributes of fear affect politicians’ abilities to achieve self-serving outcomes that are bad for voters. In it, a politician provides...

Principals can attempt to get agents to perform certain actions preferable to the principal by using ex post punishments or rewards to align incentives. Field data is mixed on whether, and to what extent, such informal incentive contracting (paradoxically) crowds out efficient solutions to the...

Terrorist movements and suicide terrorists can be found in different societies and among many religions. History is full with examples. Martyrdom is a phenomenon known from early Christhood as a survival strategy against the oppressive Roman state power as well as today’s holy warriors with...

Foreign aid critics, supporters, recipients, and donors have produced eloquent rhetoric on the need for better aid practices— has this translated into reality? This paper attempts to monitor the best and worst of aid practices among bilateral, multilateral, and UN agencies. We create aid...

We describe the negotiated-price mechanism, introduced in the USSR in 1985, to increase flexibility of retail prices. We discuss a possibility to improve interactions between manufacturing and retailing through negotiated prices, and demonstrate a methodology to estimate them, using consumer...

One view is that concessions demanded by and granted to interests groups are responsible for steady fiscal decline, and delay in reforms. We argue that negative supply shocks combined with the political objective of protecting the poor can build in incentives leading to these results. Pricing...

This paper is studying the evolution in the perception of the knowledge distribution and intra-firm operation and the way these factors affect the effort of employees. (organisational structure, back-office and front-office processes, etc. ) . The question this paper want to explore is whether...

We analyze whether incentives from relative performance pay are reduced or enhanced if a department is possibly terminated due to a crisis. Our benchmark model shows that incentives decrease in a severe crisis, but are boosted given a minor crisis since efforts are strategic complements in the...