Incentive Design and Manager Performances: an ABM Approach
AbstractWe present a simplified model to provide a virtual laboratory to test the effects of the use of different performance evaluation measures to design manager’s incentives in a project-based professional service organization. Our company’s owner has to cope with the scheduling of multiple resource constraint projects in real time (RCMPSP), and with the design of the production manager incentive, whose variable wage is tied to some measures of the performance, which are proxies of the original owner’s goal. We propose an agent based model approach where the agents’ intelligence lies in the choice of the scheduling sequences. A discrete event simulator (DES) executes the projects, allocating in real time, the limited resources available. A Genetic Algorithm, evolving the sequence, randomly generated, uses the DES to simulate the effect and ranks the solutions. In this way, we investigate the incentive alignment problem as a resource allocation problem, comparing the results deriving from their respective "good solutions".
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Bibliographic InfoPaper provided by Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino in its series Working papers with number 008.
Length: 34 pages
Date of creation: May 2012
Date of revision:
Complex System Dynamics; Resource constrained multi project scheduling; Incentive Design; Performance Evaluation Measures; Genetic Algorithm;
Find related papers by JEL classification:
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-13 (All new papers)
- NEP-CMP-2012-10-13 (Computational Economics)
- NEP-HRM-2012-10-13 (Human Capital & Human Resource Management)
- NEP-PPM-2012-10-13 (Project, Program & Portfolio Management)
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