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All-or-Nothing Monitoring: Comment

Author

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  • Bo Chen

Abstract

Zhao (2008) presents an interesting "all-or-nothing monitoring" result for a multitask moral hazard agency problem with partial effort observation. We argue that the optimal contract based on the non-verifiable observation of the agent's effort in Zhao (2008) can be regarded as a limitation on the incentive schemes available to the principal. I then propose some arguably more appropriate approaches for analyzing such agency problems. (D82, D86, M54)

Suggested Citation

  • Bo Chen, 2010. "All-or-Nothing Monitoring: Comment," American Economic Review, American Economic Association, vol. 100(1), pages 625-627, March.
  • Handle: RePEc:aea:aecrev:v:100:y:2010:i:1:p:625-27
    Note: DOI: 10.1257/aer.100.1.625
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.1.625
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    Citations

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    Cited by:

    1. Bo Chen & Yu Chen & David Rietzke, 2017. "Simple Contracts under Observable and Hidden Actions," Graz Economics Papers 2017-07, University of Graz, Department of Economics.
    2. Yu Chen & David Michael Rietzke, 2016. "Push or pull? Performance pay, incentives, and information," Working Papers 127987900, Lancaster University Management School, Economics Department.
    3. Chen, Bo, 2012. "All-or-nothing payments," Journal of Mathematical Economics, Elsevier, vol. 48(3), pages 133-142.
    4. 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.

    More about this item

    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 - - Personnel Economics - - - Labor Management

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