Employee performance evaluations usually take place on an annual basis but quarterly, monthly, or weekly evaluations are by no means exceptional. If their outcomes determine variable pay, finding the optimal frequency of performance evaluations is far from a trivial task. This paper investigates...

Non-monotone incentive structures, which - according to theory - are able to induce optimal behavior, are often regarded as empirically less relevant for labor relationships. We compare the performance of a theoretically optimal non-monotone contract with a monotone one under controlled...

Performance feedback is an integral element of an accounting system, and firms provide this feedback at varying frequencies to their employees. This paper explicates the impact of an interim performance evaluation on the principal's surplus using a dynamic two-period agency model. Two settings...

Non-monotone incentive structures, which - according to theory - are able to induce optimal behavior, are often regarded as empirically less relevant for labor relationships. We compare the performance of a theoretically optimal non-monotone contract with a monotone one under controlled...

As financial performance measures are not the sole determinant of chief executive officer (CEO) compensation, researchers have investigated social relationships between the CEO and the supervisory board's (SB's) members to identify other determinants. However, different conclusions have been...

This paper analyzes the occurrence of renegotiation costs in dynamic, binary agency models with a risk‐averse agent. I investigate technological interdependence arising from complementary tasks or substitutable tasks across periods. In addition, I analyze stochastic interdependence between...

We study e¤ects of trust in implicit contracts. Trust changes whenever the principal honors or dishonors an implicit contract. Usually a higher discount rate lowers the value of trade in an agency. We show that a su¢ ciently high level of (ex ante) trust can o¤set this ef- fect. Strategies of...

In this paper the impact of ability and learning potential on incentive contracts is analyzed. A central feature of the model is that the true ability will not be revealed. The learning potential of an agent is modeled as the magnitude of impact on the agent's expected ability that...

As the positive impact of trust on business success is widely undisputed, the question of how to measure trust naturally arises. Both expectations of trustworthy behavior and possible gains and losses from a trusting relationship influence the level of trust between two parties or individuals....