Delegating performance evaluation

• 成果类型: Article
• 署名作者: Letina, Igor; Liu, Shuo; Netzer, Nick
• 署名单位: University of Bern; Peking University; University of Zurich
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE3570
• 发表日期: 2020-05-01
• 页码: 477-509
• 关键词: Subjective performance evaluation; mechanism design without money; optimal delegation; optimality of contests; D02; D82; M52

摘要

We study optimal incentive contracts with multiple agents when performance is evaluated by a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal fixes a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer's potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap. Our analysis has implications for various applications, such as the design of worker compensation or the allocation of research grants.