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Performance measure congruity in linear agency models with interactive tasks

Author

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  • Budde, Jörg

Abstract

This note demonstrates how performance measure congruity and noise determine an agency’s total surplus within an linear agency framework with multiple tasks. It provides a decomposition of agency costs, leading back to a congruity index previously proposed in the literature. In addition, it generalizes this index to a more general cost function, thereby highlighting the context specificity of the original criterion. Finally, it suggests a redefinition of tasks under which the criterion prevails.

Suggested Citation

  • Budde, Jörg, 2006. "Performance measure congruity in linear agency models with interactive tasks," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 204, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:204
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    File URL: https://epub.ub.uni-muenchen.de/13348/1/204.pdf
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    More about this item

    Keywords

    incentives; multi-tasking; performance measurement;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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