Balancing Performance Measures When Agents Behave Competitively in an Environment With Technological Interdependencies
AbstractThis paper addresses the question, what metrics should be used for performance evaluation and in particular how they should be weighted and combined in the presence of technological interdependencies when the agents exhibit variedly strong developed rivalry. We find that the principal reacts to his agents' competitive preferences through a reallocation of incentive intensity. As a consequence, depending on the underlying sort of technological interdependency, various differences in the balancing of performance measures compared to the case of purely egoistical behavior arise and changes in the agents' basic types of compensation can occur. We further show that the principal does not want both of his agents to behave equally competitively. Instead, he can only profit when the agents are asymmetrical. Then the principal wants the more productive agent to exhibit rivalry while the other ideally should behave completely egoistically.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Munich, Munich School of Management in its series Discussion Papers in Business Administration with number 2113.
Date of creation: 04 Feb 2008
Date of revision:
Social Preferences; Rivalry; Technological Interdependencies; Performance Measurement; Team Composition;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pedro Rey-Biel, 2007.
"Inequity Aversion and Team Incentives,"
319, Barcelona Graduate School of Economics.
- Michihiro Kandori, 2002.
"The Erosion and Sustainability of Norms and Morale,"
CIRJE-F-169, CIRJE, Faculty of Economics, University of Tokyo.
- Michihiro Kandori, 2002. "The Erosion and Sustainability of Norms and Morale," Levine's Working Paper Archive 506439000000000030, David K. Levine.
- S. Huck & D. Kübler & J. Weibull, 2002.
"Social norms and optimal incentives in firms,"
SFB 373 Discussion Papers
2002,11, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2001. "Social norms and optimal incentives in firms," Working Paper Series in Economics and Finance 466, Stockholm School of Economics.
- Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2001. "Social Norms and Optimal Incentives in Firms," Working Paper Series 565, Research Institute of Industrial Economics.
- Itoh, Hideshi, 1992. "Cooperation in Hierarchical Organizations: An Incentive Perspective," Journal of Law, Economics and Organization, Oxford University Press, vol. 8(2), pages 321-45, April.
- Bengt Holmstrom & Paul R. Milgrom, 1985.
"Aggregation and Linearity in the Provision of Intertemporal Incentives,"
Cowles Foundation Discussion Papers
742, Cowles Foundation for Research in Economics, Yale University.
- Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
- Ramakrishnan, Ram T S & Thakor, Anjan V, 1991. "Cooperation versus Competition in Agency," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(2), pages 248-83, Fall.
- Christian Grund & Dirk Sliwka, 2005.
"Envy and Compassion in Tournaments,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 14(1), pages 187-207, 03.
- William S. Neilson & Jill Stowe, 2010. "Piece-Rate Contracts For Other-Regarding Workers," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 575-586, 07.
- Mirrlees, J A, 1999. "The Theory of Moral Hazard and Unobservable Behaviour: Part I," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 3-21, January.
- Küpper, Hans-Ulrich & Sandner, Kai, 2008. "Differences in Social Preferences - Are They Profitable for the Firm?," Discussion Papers in Business Administration 2122, University of Munich, Munich School of Management.
- Ramalingam, Abhijit, 2009. ""Endogenous" Relative Concerns: The Impact of Workers' Characteristics on Status and Pro ts in the Firm," MPRA Paper 18759, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Philipp Beltz).
If references are entirely missing, you can add them using this form.