摘要
In classic agency models, first best efficiency can′t be achieved due to the trade-off between risk and incentives except that agency is risk neutral. Whereas if the principal′s objective is not contractible, an alternative objective performance measurement which is contractible is always proposed. However, if the reaction of this objective performance measurement to agency′s effort differs from that of the principal′s objective, the agent would game performance measures, which leads to loss of efficiency, even if agency is risk neutral. By adding subjective weights on objective measures, or combination of subjective performance measurement with objective performance measurement, efficiency can be regained. Implications for faculty pay are also discussed.
In classic agency models, first best efficiency can′t be achieved due to the trade-off between risk and incentives except that agency is risk neutral. Whereas if the principal′s objective is not contractible, an alternative objective performance measurement which is contractible is always proposed. However, if the reaction of this objective performance measurement to agency′s effort differs from that of the principal′s objective, the agent would game performance measures, which leads to loss of efficiency, even if agency is risk neutral. By adding subjective weights on objective measures, or combination of subjective performance measurement with objective performance measurement, efficiency can be regained. Implications for faculty pay are also discussed.
基金
This projectis supported by the tenth five-year plan of the research on humanities & social scienceof Ministry of Education( # 0 1 JC6 30 0 0 3)
