IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Standard Setting in an Agency

Listed author(s):
  • Anthony A. Atkinson

    (Queen's University)

Registered author(s):

    The decision to hire an agent (manager) to transact business on the principal's (owner's) behalf reflects (and results) in the agent's use of specialized skills and information in managing the agency's (firm's) activities. This paper considers an agency relationship where the principal and the agent have differing beliefs regarding the uncertain economic returns to the agency and investigates the properties of standard setting and profit sharing as an incentive device. It is demonstrated that this incentive scheme causes the agent to use, without intervention by the principal, his presumably "superior" information in a manner which is mutually beneficial to the agent and the principal. It is also demonstrated that this incentive scheme is not inferior and is usually superior to a scheme in which the principal instructs the agent on which decision to implement.

    If 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.

    File URL: http://dx.doi.org/10.1287/mnsc.24.13.1351
    Download Restriction: no

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 24 (1978)
    Issue (Month): 13 (September)
    Pages: 1351-1361

    as
    in new window

    Handle: RePEc:inm:ormnsc:v:24:y:1978:i:13:p:1351-1361
    Contact details of provider: Postal:
    7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA

    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page: http://www.informs.org/
    Email:


    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:24:y:1978:i:13:p:1351-1361. See general 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: (Mirko Janc)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.