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dc.contributor.authorKvaløy, Ola
dc.contributor.authorOlsen, Trond E.
dc.date.accessioned2014-12-15T10:22:13Z
dc.date.available2014-12-15T10:22:13Z
dc.date.issued2013-12
dc.identifier.issn1500-4066
dc.identifier.urihttp://hdl.handle.net/11250/227208
dc.description.abstractThis paper analyses and compares optimal relational contracts be- tween a principal/firm and a set of agents when (a) only aggregate out- put can be observed, and (b) individual outputs can be observed. We show that the optimal contract under (a) is a team incentive scheme where each agent is paid a maximal bonus for aggregate output above a threshold and a minimal (no) bonus otherwise. The team's effi- ciency decreases with its size (number of agents) when outputs are non-negatively correlated, but may increase considerably with size if outputs are negatively correlated. In the case where individual output can be observed, we show that the optimal contract is a tournament scheme where the conditions for an agent to obtain the (single) bonus are stricter for negatively compared to positively correlated outputs. We finally show that if agents have bargaining power, firms may delib- erately choose to organize production as a team where only aggregate output is observable. The team alternative is more likely to be supe- rior under negatively correlated outputs.nb_NO
dc.language.isoengnb_NO
dc.publisherFORnb_NO
dc.relation.ispartofseriesDiscussion paper;13/13
dc.titleTeams and Tournaments in Relational Contractsnb_NO
dc.typeWorking papernb_NO


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