Balancing Performance Measures When Agents Behave Competitively in an Environment With Technological Interdependencies
This 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.
|Date of creation:||04 Feb 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstr. 28,80539 Munich, Germany|
Web page: http://www.bwl.uni-muenchen.de
More information through EDIRC
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, 2008.
"Inequity Aversion and Team Incentives,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 110(2), pages 297-320, 06.
- Pedro Rey-Biel, . "Inequity Aversion and Team Incentives," Working Papers 319, Barcelona Graduate School of Economics.
- Pedro Rey Biel, 2004. "Inequity aversion and team incentives," Microeconomics 0407009, EconWPA.
- Pedro Rey-Biel, 2007. "Inequity Version and Team Incentives," UFAE and IAE Working Papers 677.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- 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.
- Michihiro Kandori, 2002.
"The Erosion and Sustainability of Norms and Morale,"
Levine's Working Paper Archive
506439000000000030, David K. Levine.
- Michihiro Kandori, 2002. "The Erosion and Sustainability of Norms and Morale," CIRJE F-Series CIRJE-F-169, CIRJE, Faculty of Economics, University of Tokyo.
- J. A. Mirrlees, 1999. "The Theory of Moral Hazard and Unobservable Behaviour: Part I," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 3-21.
- Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2001.
"Social Norms and Optimal Incentives in Firms,"
Working Paper Series
565, Research Institute of Industrial Economics.
- 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," SSE/EFI Working Paper Series in Economics and Finance 466, Stockholm School of Economics.
- 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.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:lmu:msmdpa:2113. 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: (Debbie Claassen)
If references are entirely missing, you can add them using this form.