Considered in this paper is the problem of intrafirm resource allocation. Two incentive schemes, the Groves scheme and profit sharing, have been presented in the literature as ways of dealing with this problem under conditions of asymmetric information. In the absence of effort aversion by...

The fiduciary relationship between portfolio managers and the investors they represent may be viewed as a principal-agent relationship, and therefore we have used the methodology from the agency literature in economics and finance to study the impact of existing compensation arrangements on the...