AbstractA principal can observe both the output and input of an agent who works at a job involving multiple tasks. We provide a simple theory that explains why it may be optimal for the principal to use only an output-based incentive contract, even though the principal can monitor the agent's actions perfectly in all but one task and knows exactly which action is optimal for each task. (JEL D82, D86, M54)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 98 (2008)
Issue (Month): 4 (September)
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
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- Chen, Bo, 2012. "All-or-nothing payments," Journal of Mathematical Economics, Elsevier, vol. 48(3), pages 133-142.
- Christian Espinosa & Juan Gorigoitía & Carlos Maquieira, 2012. "Nonlinear behaviour of EMBI index:the case of eastern European countries," Working Papers 37, Facultad de Economía y Empresa, Universidad Diego Portales.
- Tigran Melkonyan & Michael H. Taylor, 2013.
"Regulatory Policy Design for Agroecosystem Management on Public Rangelands,"
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Agricultural and Applied Economics Association, vol. 95(3), pages 606-627.
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- Felipe Balmaceda, 2012.
"On the Optimality of One-size-fits-all Contracts: The Limited Liability Case,"
Documentos de Trabajo
291, Centro de Economía Aplicada, Universidad de Chile.
- Felipe Balmaceda, 2013. "On the Optimality of One-size-fits-all Contracts: The Limited Liability Case," Working Papers 39, Facultad de Economía y Empresa, Universidad Diego Portales.
- Dunia López-Pintado & Juan D. Moreno-Ternero, 2011. "On the optimal management of teams under budget constraints," Working Papers 11.11, Universidad Pablo de Olavide, Department of Economics.
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