Performance Measurement in Multi-Task Agencies
Veikko Thiele
MPRA Paper from University Library of Munich, Germany
Abstract:
This paper analyzes a multi-task agency model with a risk-neutral and financially constrained agent. The agent's performance evaluation is thereby incongruent, i.e. it does not perfectly reflect the relative contribution of the agent's multi-dimensional effort to firm's profit. This paper elaborates on the improvement of the agent's performance evaluation through the costly acquisition of additional performance measures aimed at inducing the agent to implement a more efficient effort allocation across tasks. It contrasts two alternatives for the principal: (i) to centrally invest in the information acquisition; or (ii), to delegate this task to a supervisor. This paper demonstrates that the principal generally favors delegation for a sufficiently incongruent measurement of the agent's performance, and a centralized investment, otherwise.
Keywords: Multi-task agencies; performance measurement; distortion; congruity; limited liability; incentives (search for similar items in EconPapers)
JEL-codes: D23 D82 M52 (search for similar items in EconPapers)
Date: 2007-03-31
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (2)
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Journal Article: Performance measurement in multi-task agencies (2007) 
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2469
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