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This Paper examines optimal incentives and performance measurement in a setting where an agent has specific knowledge … choice of performance measures and incentives depends on the agent’s knowledge, environmental risk, technological uncertainty …
Persistent link: https://www.econbiz.de/10005504471
, the model offers an explanation for motivational crowding out: Control systems and pecuniary incentives may erode morale …
Persistent link: https://www.econbiz.de/10005662241
leads to weaker incentives for effort, compared with non-integration. Our theory makes minimal assumptions about the … division managers. The division managers' job is to create profitable investment projects. Giving the managers incentives to do …' incentives. The resulting tradeoff between a better use of resources and diminished incentives for effort determines whether …
Persistent link: https://www.econbiz.de/10005666612
Consider Holmström.s moral hazard in teams problem when there are n agents, each agent i has a a(i)-dimensional strategy space and output can be m-dimensional. We show that a compensation mechanism that satisfies budget balance, limited liability and implements an efficient allocation...
Persistent link: https://www.econbiz.de/10005791765
Standard & Poor's provides corporate governance ratings to firms who can, upon learning those, decide to reveal them or not to the market. This paper identifies the circumstances under which such a simple ownership contract over ratings can emerge as the optimal arrangement. Firms hiding their...
Persistent link: https://www.econbiz.de/10005067394
organization. Because of contractual incompleteness, monetary incentives are insufficient to internalize these effects in the … decision right to the agent to implement ‘small’ projects. Extensions of the model discuss the role of effort incentives …
Persistent link: https://www.econbiz.de/10005661581
I develop a property rights theory of the firm in which managers bargain over the sharing of quasi-rents in the presence of private information. I analyse the interdependence between the ownership structure of firms and the bargaining inefficiency that is due to the presence of private...
Persistent link: https://www.econbiz.de/10005662109
We explore the role of firms in insuring risk-averse workers. As a device that allows workers to commit to the delivery of their output, the firm arises endogenously as an alternative to the spot market if workers are sufficiently risk averse and the firm can base incentive payments on good...
Persistent link: https://www.econbiz.de/10005667043
- the reduction in second-period incentives is outweighed by the increase in first-period incentives. Thus, even though …
Persistent link: https://www.econbiz.de/10005667058
We explore the optimal delegation of decision rights by a principal to a better informed but biased agent. In an infinitely repeated game a long-lived principal faces a series of short-lived agents. Every period they play a cheap talk game a la Crawford and Sobel (1982) with constant bias,...
Persistent link: https://www.econbiz.de/10005789058