Uncertainty and incentives

• 成果类型: Article
• 署名作者: Prendergast, C
• 署名单位: University of Chicago; National Bureau of Economic Research
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/338676
• 发表日期: 2002
• 页码: S115-S137
• 关键词: relative performance evaluation; executive-compensation; sales-force; CONTRACTS; appraisal; CHOICE

摘要

Empirical work testing for a trade-off between risk and incentives has had, at best, mixed success. This article provides two simple reasons, associated with subjectivity of performance appraisals, why we might not expect to see any negative relationship. Both reasons relate to empirically observed problems associated with monitoring: (i) supervisors sometimes bias their evaluations based on their personal feelings toward their subordinates, and (ii) supervisors will sometimes offer evaluations that reduce their costs. These aspects of monitoring are ignored in the standard model and can reverse the usual negative trade-off between risk and incentives.