This paper investigates the degree of shortfall between the wages workers earn and what they could earn assuming perfect or costless information in the labor market. The authors use the stochastic frontier regression technique to estimate the degree of shortfall found in wages on an individual...

This paper extends the work of Michael L. Boyd (1987) by examining the question of efficiency in Yugoslavian agricultural production using the stochastic production frontier. The authors fin d the private sector produces with higher output efficiency than the social sector. Next, they examine...

This paper studies optimal incentive contracts when workers have career concerns--concerns about the effects of current performance on future compensation. The authors show that the optimal compensation contract optimizes total incentives: the combination of the implicit incentives from career...

Incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined use of subjective and objective performance measures in (respectively) implicit and explicit incentive contracts. The...

We document differences in CEO pay and incentives in the United States and the United Kingdom for 1997. After controlling for size, sector and other firm and executive characteristics, CEOs in the US earn 45% higher cash compensation and 190% higher total compensation. The calculated effective...

The authors' estimates of the pay-performance relation (including pay, options, stockholding, and dismissal) for chief executive officers indicate that CEO wealth changes $3.25 for every $1,000 changes in shareholder wealth. Although the incentives generated by stock ownership are large relative...

We assert that decision rights in organizations are not contractible: the boss can always overturn a subordinate's decision, so formal authority resides only at the top. Although decision rights cannot be formally delegated, they might be informally delegated through self-enforcing relational...