Evaluation Frequency and Forgetful Principals
AbstractThis paper analyzes the bahavior of a principal with bounded memory who can offer a two-period performance-based contract to an agent. In the model he can choose whether to evaluate the agent after each period or only at the end of the second period. If the agent is wealth-constrained, the option to evaluate him twice can be profitable. But without the constraint on the part of the agent, the principal will always prefer to evaluate only once in order to reduce evaluation costs. Finally we consider a modification leads us to a trade-off between more and less frequent evaluations.
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 Dortmund, Department of Economics in its series Discussion Papers in Economics with number 05_06.
Length: 24 pages
Date of creation: Oct 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-17 (All new papers)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Eva Borchard) The email address of this maintainer does not seem to be valid anymore. Please ask Eva Borchard to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.