A group of diverse principals who represent an institution contract with an agent for the production of a two … is a principal who is elected and granted authority to determine whether the full group considers the agent's production …-dimensional commodity. One dimension of the agent's production is verifiable, while the other is unverifiable. The principals can employ two …

principal can strategically defer the agent's pay-for-performance risk to states of the world when the termination costs are … if it informs him of his own performance and, thus, induces fluctuations in his expected compensation. Monitoring …, however, may be valuable as it improves immediate production decisions. This paper shows that the employee's past performance …