The problem of designing tournament contracts under limited liability and alternative performance measures is considered. Under risk neutrality, only the best performing agent receives an extra premium if the liability constraint becomes binding. Under risk aversion, more than one prize is...

In this paper I consider the impact of a noisy indicator regarding a manager's manipulative behavior on optimal effort incentives and the extent of earnings management. The analysis in this paper extends a twotask, single performance measure LEN model by including a binary random variable. I...

We consider a single-period, pure-exchange setting with a single trading date and a single consumption date. Investors are uncertain about the risk aversion of the other investors participating in the capital market, implying that the market's aggregate risk aversion is a random variable. Unlike...

We examine how performance management practices that render employee accomplishments transparent in an organization depend on employees’ hierarchical level. We consider a principal-agent model of an organization where the principal contracts directly with a group of higher-level agent-workers...

This study investigates whether having an upstream or downstream agent privately observe an interim performance measure and disseminating this measure to the other agent is valuable to the principal. The signal is informative about the upstream agent’s action and positively correlated with...