Delegating Performance Evaluation
Copyright policy )Delegating Performance Evaluation
We study optimal incentive contracts with multiple agents when performance is evaluated by a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal fixes a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer's potential leniency bias. The optimal effort profile can be uniquely implemented by an all‐pay auction with a cap. Our analysis has implications for various applications, such as the design of worker compensation or the allocation of research grants.
- Peking University China (People's Republic of)
- University of Bern Switzerland
- University of Bern Switzerland
- Hebei University China (People's Republic of)
- University of Bern Finland
2000 General Economics, Econometrics and Finance, Leistungsbeurteilung, Spieltheorie, Principal-agent models, Subjective performance evaluation, Auctions, bargaining, bidding and selling, and other market models, ECON Department of Economics, 10007 Department of Economics, Contract theory (moral hazard, adverse selection), optimal delegation, optimality of contests, delegation, ddc:330, M52, subjective performance evaluation, Ressourcenallokation, Mechanism design theory, 330 Economics, D82, Agency, Delegation, Performance evaluation, D02, mechanism design without money, Theorie
2000 General Economics, Econometrics and Finance, Leistungsbeurteilung, Spieltheorie, Principal-agent models, Subjective performance evaluation, Auctions, bargaining, bidding and selling, and other market models, ECON Department of Economics, 10007 Department of Economics, Contract theory (moral hazard, adverse selection), optimal delegation, optimality of contests, delegation, ddc:330, M52, subjective performance evaluation, Ressourcenallokation, Mechanism design theory, 330 Economics, D82, Agency, Delegation, Performance evaluation, D02, mechanism design without money, Theorie
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