Measurement Error and Incentive Pay

Eero Lauri Oskari Lehto

LABOUR, 2005, vol. 19, issue 1, 81-89

Abstract: Abstract. We will analyse the optimal incentive scheme when the risk‐neutral principal contracts with many risk‐averse agents. Each agent produces an individual contribution which jointly form a total output. Agents’ efforts are unobservable and the principal cannot observe individual outputs without an error. Neither the observed individual output of an agent nor the observed total output of the whole team are then sufficient statistics for the actual individual output in the sense of Blackwell. We show that the mixed contract of the pure piece‐rate contract and of the pure team contract then dominates the pure contracts from the principal's point of view.

Date: 2005
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/j.1467-9914.2005.00295.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:labour:v:19:y:2005:i:1:p:81-89

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1121-7081

Access Statistics for this article

LABOUR is currently edited by Franco Peracchi

More articles in LABOUR from CEIS Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().