Good news and bad news in subjective performance evaluation

Earlier studies show that contracts under subjective performance evaluation are dichotomous and punish only worst performance. I show that with limited liability payments need not be binary. More importantly, if the agent earns a rent from limited liability, the optimal contract distinguishes only signals of good news and bad news of the agentâ€™s action.

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Year of publication:	2013-09
Authors:	Budde, Jörg
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	bonus \| monotone likelihood ratio \| wage compression

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Extent:	application/pdf
Series:	Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems.
Type of publication:	Book / Working Paper
Classification:	D82 - Asymmetric and Private Information ; M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs) ; M54 - Labor Management (team formation, worker empowerment, job design, tasks and authority, job satisfaction)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011140995