Performance Measurement Technologies and the Trade-off of Risk and Incentives

Oliver Gurtler
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Oliver Gurtler: Department of Economics, University of Bonn, Germany

International Journal of Business and Economics, 2007, vol. 6, issue 1, 1-10

Abstract: This paper analyzes a principal's decision of when to invest in a performance measurement technology. Interestingly, higher risk may make such an investment less likely. In this case, the strength of incentives certainly decreases. If, however, an increase in risk induces an initially non-investing principal to invest, incentive strength may increase.

Keywords: complements; risk; incentive strength; performance measurement system (search for similar items in EconPapers)
JEL-codes: D81 J33 M52 (search for similar items in EconPapers)
Date: 2007
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