evaluation to the agent if the evaluation turns out to be bad. The justification assures the agent that the principal has not … her evaluation. For good performance, however, the principal pays a constant high wage without justification. Furthermore …Should principals explain and justify their evaluations? In this paper the principal's evaluation is private …

discrete bonuses after they do sufficiently well. By adjusting monitoring intensity and communication of performance, the …

rents, reducing his incentives to exert effort. The optimal contract controls information rents to improve incentives by … reflects the agent's private ability, a simple equity contract is optimal …

his evaluation of the agent's effort. Such a contract induces the neutral type of supervisor to report the agent … types, we find that the optimal contract may be very simple, paying the supervisor a flat wage independent of his type and … performance (leniency bias) may be the outcome of an optimal contract under informational asymmetries …

cost. The robust contract generates a seemingly excessive pay-performance sensitivity. The worst-case effort cost is high … contract is misspecified, i.e., when he is offered the robust contract, but his true effort cost is constant. I find that …

principal is ambiguity averse, and designs a contract which is robust to the worst case effort cost process. Ambiguity divides … the contract into two regions. After sufficiently high performance, the agent reaches the over-compensation region, where … he receives excessive benefits compared to the contract without ambiguity, while after low performance, he enters the …

be implemented even if the supervisor's preferences are unknown. The corresponding optimal contract is similar to what we …

relational contract could establish cooperation through peer monitoring even under relative performance evaluation, which …