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Moral hazard is endemic to employment relationships and firms often use performance pay and managerial control to address this problem. While performance pay has received much empirical attention, managerial control has not. We analyze data from a managerial-control field experiment in which an...
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Moral hazard is endemic to employment relationships and firms often use performance pay and managerial control to address this problem. While performance pay has received much empirical attention, managerial control has not. We analyze data from a managerial-control field experiment in which an...
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for defective units identified during inspection or pays the unit price for good units. In the certification regime, the … supplier obtains vendor certification and the buyer pays the unit price for all units supplied. The inspection technology and … implements the supplier's high-quality and low-inspection. The supplier's expected profit is greater than his reservation profit …
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