The Use of Performance Measures in Incentive Contracting
The characteristics of performance measures (those data on which explicit incentive contracts are based) are examined to understand how firms use incentive contracting, and to predict the use of incentives in practice. Two ways of thinking about the choice of performance measures are suggested. The...
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| Veröffentlicht in: | The American economic review 2000-05, Vol.90 (2), p.415-420 |
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| creator | Baker, George |
| description | The characteristics of performance measures (those data on which explicit incentive contracts are based) are examined to understand how firms use incentive contracting, and to predict the use of incentives in practice. Two ways of thinking about the choice of performance measures are suggested. The first, and the perspective used in the paper, is to suppose the existence of a set of performance measures that the firm could use in an incentive contract and ask which measure yields the strongest incentives or the highest surplus. The second way of looking at the question is to ask how much the firm should pay to develop better performance measure. |
| doi_str_mv | 10.1257/aer.90.2.415 |
| format | Article |
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examined to understand how firms use incentive contracting, and to predict the use of incentives in practice. Two ways of thinking about the choice of performance measures are suggested. The first, and the perspective used in the paper, is to suppose the existence of a set of performance measures that the firm could use in an incentive contract and ask which measure yields the strongest incentives or the highest surplus. The second way of looking at the question is to ask how much the firm should pay to develop better performance measure.</abstract><cop>Menasha, Wis</cop><pub>American Economic Association</pub><doi>10.1257/aer.90.2.415</doi><tpages>6</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0002-8282 |
| ispartof | The American economic review, 2000-05, Vol.90 (2), p.415-420 |
| issn | 0002-8282 1944-7981 |
| language | eng |
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| source | Periodicals Index Online; EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; American Economic Association |
| subjects | Agency Bank loans Bank officers Business management Contract incentives Contracts Design Economic incentives Economic models Economic theory Employee motivation Employees Expected values Financial risk Incentive plans Incentives Loans Performance metrics Profit planning Profitability Profits Risk Sales management Studies Unresolved Issues in Personnel Economics |
| title | The Use of Performance Measures in Incentive Contracting |
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