Agency in Hierarchies: Middle Managers and Performance Evaluations

• 成果类型: Article
• 署名作者: Castro-Pires, Henrique
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1093/jeea/jvae003
• 发表日期: 2024
• 页码: 2414-2465
• 关键词: Moral hazard; EFFICIENCY; principal; incentives; CONTRACTS; BEHAVIOR

摘要

This paper studies the optimal joint design of incentives and performance rating scales in a principal-manager-worker hierarchy. The principal wants to motivate the worker to exert unobservable effort at the minimum feasible cost. Given the worker's effort, two signals are realized: public and verifiable output and a private non-verifiable signal known only to the manager. The principal may try to elicit the manager's private information by requiring her to evaluate the worker's performance. Payments may depend on output and the manager's evaluation. I show that the principal can achieve no more than what is feasible with a binary rating scale. I also identify scenarios where subjective evaluations are valuable (non-valuable), reduced transparency is advantageous, and forced ranking outperforms individual evaluations.