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 …

explain her evaluation to the agent if and only if the evaluation turns out to be bad. The justification guarantees the agent …Should principals explain and justify their evaluations? In this paper the principal's evaluation is private … that the principal has not distorted the evaluation downwards. On the equilibrium path, as long as the principal provides a …

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 …