8,463 research outputs found
Good news and bad news in subjective performance evaluation
Earlier studies show that contracts under subjective performance evaluation are dichotomous and punish only worst performance. I show that with limited liability payments need not be binary. More importantly, if the agent earns a rent from limited liability, the optimal contract distinguishes only signals of good news and bad news of the agentâs action
Performance measure congruity in linear agency models with interactive tasks
This note demonstrates how performance measure congruity and noise determine an agencyâs total surplus within an linear agency framework with multiple tasks. It provides a decomposition of agency costs, leading back to a congruity index previously proposed in the literature. In addition, it generalizes this index to a more general cost function, thereby highlighting the context specificity of the original criterion. Finally, it suggests a redefinition of tasks under which the criterion prevails
Variance analysis and linear contracts in agencies with distorted performance measures
This paper investigates the role of variance analysis procedures in aligning objectives under the condition of distorted performance measurement. A riskneutral agency with linear contracts is analyzed, whereby the agent receives postcontract, pre-decision information on his productivity. If the performance measure is informative with respect to the agentâs marginal product concerning the principalâs objective, variance investigation can alleviate effort misallocation. These results carry over to a participative budgeting situation, but in this case the variance investigation procedures are less demanding
Verifiable and Nonverifiable Information in a Two-Period Agency Problem
I examine how a firmâs opportunity to verify information influences the joint use of verifiable and unverifiable information for incentive contracting. I employ a simple two-period agency model, in which contract frictions arise from limited liability and the potential unverifiability of the principalâs information about the agentâs action. With short-term contract, the principal benefits from both a more informative and a more conservative verification of his private information. With long-term contracts, he may prefer a less informative verification, but his preference for a conservative verification persists
Bonus Pools, Limited Liability, and Tournaments
Tournaments have been objected as resulting from ad hoc restrictions to the contracting problem which are not easily justified. Taking into account that a performance measure might not be verifiable to a third party, however, a restriction to payments which sum up to a constant may be reasonable. The paper analyzes such fixed payment schemes with regard to their optimality and the relation to the special case of tournaments. It emerges that for a group of identical risk-neutral agents, the optimal fixed payment scheme is a tournament
Distorted performance measurement and relational contracts
This paper analyzes the use of alternative performance measures in an agency model in which contracting incorporates both formal and informal agreements. It is shown that under a proper use of verifiable and unverifiable performance measures, the two types of contracts are complements, regardless of the principalâs fallback position. The analysis therefore contrasts earlier results of the literature, and provides a rationale for the application of subjective performance information, as it is frequently incorporated in strategic performance measurement systems
Enhanced transport through desorption-mediated diffusion
We present a master equation approach to the study of the bulk-mediated surface diffusion mechanism in a three-dimensional confined domain. The proposed scheme allowed us to evaluate analytically a number of magnitudes that were used to characterize the efficiency of the bulk-mediated surface transport mechanism, for instance, the mean escape time from the domain, and the mean number of distinct visited sites on the confined domain boundary.Fil: Rojo, FĂ©lix. Universidad Nacional de CĂłrdoba. Facultad de MatemĂĄtica, AstronomĂa y FĂsica; ArgentinaFil: Budde, Carlos Esteban. Universidad Nacional de CĂłrdoba. Facultad de MatemĂĄtica, AstronomĂa y FĂsica; Argentina. Consejo Nacional de Investigaciones CientĂficas y TĂ©cnicas; ArgentinaFil: Wio, Horacio Sergio. Universidad de Cantabria; España. Consejo Superior de Investigaciones Cientificas; España. Consejo Nacional de Investigaciones CientĂficas y TĂ©cnicas; ArgentinaFil: Budde, Carlos Ernesto. Universidad Nacional de CĂłrdoba. Facultad de MatemĂĄtica, AstronomĂa y FĂsica; Argentin
Variance analysis and linear contracts in agencies with distorted performance measures
This paper investigates the role of variance analysis procedures in aligning objectives under the condition of distorted performance measurement. A riskneutral agency with linear contracts is analyzed, whereby the agent receives postcontract, pre-decision information on his productivity. If the performance measure is informative with respect to the agentâs marginal product concerning the principalâs objective, variance investigation can alleviate effort misallocation. These results carry over to a participative budgeting situation, but in this case the variance investigation procedures are less demanding.
Performance measure congruity in linear agency models with interactive tasks
This note demonstrates how performance measure congruity and noise determine an agencyâs total surplus within an linear agency framework with multiple tasks. It provides a decomposition of agency costs, leading back to a congruity index previously proposed in the literature. In addition, it generalizes this index to a more general cost function, thereby highlighting the context specificity of the original criterion. Finally, it suggests a redefinition of tasks under which the criterion prevails.incentives; multi-tasking; performance measurement
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