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dc.contributor.authorKvaløy, Ola
dc.contributor.authorOlsen, Trond E.
dc.date.accessioned2006-07-10T12:24:05Z
dc.date.available2006-07-10T12:24:05Z
dc.date.issued2005-08
dc.identifier.issn1500-4066
dc.identifier.urihttp://hdl.handle.net/11250/163569
dc.description.abstractThe paper analyzes conditions for implementing incentive schemes based on, respectively joint, relative and independent performance, in a relational contract between a principal and a team of two agents. A main result is that the optimal incentive regime depends on the productivity of the agents, or more precisely on the returns from high effort. This occurs because agents’ productivities affect the principal’s temptation to renege on the relational contract. The analysis suggests that we will see a higher frequency of relative performance evaluation (RPE) - and schemes that lie close to independent performance evaluation - as we move from low-productive to high-productive environments. In particular, it is shown that if effort-productivity is sufficiently high, the optimal scheme for the principal is (for a range of discount factors) a collusion-proof RPE scheme, even if there is no common shock that affects the agents’ output.en
dc.format.extent380758 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoengen
dc.publisherNorwegian School of Economics and Business Administration. Department of Finance and Management Scienceen
dc.relation.ispartofseriesDiscussion paperen
dc.relation.ispartofseries2005:7en
dc.titleTeam incentives in relational employment contractsen
dc.typeWorking paperen


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