Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts hinges on two characteristics: noise and distortion. These criteria, though, will only be useful in practice as long as the noise and distortion of a performance measure can be...

Since the adoption of the Performance Based Bonus (PBB) scheme in 2012, its effectiveness-particularly its impact on agencies' reform efforts and on public sector employees' motivation and productivity-have not yet been examined. The Department of Budget and Management (DBM) deems it critical to...

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, it...