Performance measure congruity in linear agency models with interactive tasks

Jörg Budde

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 generalizes this index to a more general cost function, thereby highlighting the context specificity of the original criterion. Finally, it suggests a redefinition of tasks under which the criterion prevails.

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Year of publication:	2006 ; revised version, November 2006
Authors:	Budde, Jörg
Publisher:	Mannheim [u.a.] : Sonderforschungsbereich/Transregio 15
Subject:	incentives \| multi-tasking \| performance measurement \| Performance-Messung \| Performance measurement \| Prinzipal-Agent-Theorie \| Agency theory \| Leistungsanreiz \| Performance incentive \| Theorie \| Theory