Performance measure congruity in linear agency models with interactive tasks

Jörg Budde

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: This note demonstrates how performance measure congruity and noise determine an agency’s total surplus within an linear agency framework with multiple tasks. It provides a decomposition of agency costs, leading back to a congruity index previously proposed in the literature. In addition, it generalizes this index to a more general cost function, thereby highlighting the context specificity of the original criterion. Finally, it suggests a redefinition of tasks under which the criterion prevails.

Keywords: incentives; multi-tasking; performance measurement (search for similar items in EconPapers)
JEL-codes: D82 M52 (search for similar items in EconPapers)
Date: 2006-11
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:204

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