Specific knowledge and performance measurement

• 成果类型: Article
• 署名作者: Raith, Michael
• 署名单位: University of Rochester
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/j.1756-2171.2008.00050.x
• 发表日期: 2008
• 页码: 1059-1079
• 关键词: investment opportunity set; incentive contracts; moral hazard; trade-off; COMPENSATION; INFORMATION; RISK; aggregation; sensitivity; complexity

摘要

I examine optimal incentives and performance measurement in a model where an agent has specific knowledge (in the sense of Jensen and Meckling) about the consequences of his actions for the principal. Contracts can be based both on input measures related to the agent's actions and an output measure related to the principal's payoff. Whereas input-based pay minimizes income risk, only output-based pay encourages the agent to use his knowledge efficiently. In general, it is optimal to use both kinds of performance measures. The results help to explain some empirical puzzles and lead to several new predictions.