Optimal contracting with subjective evaluation

Optimal Contracting with Subjective Evaluation: The Effects of Timing, Malfeasance and Guile. W. Bentley MacLeod, Teck Yong Tan. NBER Working Paper No.

Optimal Contracting with Subjective Evaluation. This paper extends the standard principal-agent model to allow for subjecti~~e evaluation. The optimal contract results in more compressed pay relative to the case ~ith~,er(fiableperformance measures. Optimal Contracting with Subjective Evaluation: The Effects of Timing, Malfeasance and Guile W. Bentley MacLeod and Teck Yong Tan NBER Working Paper No. 22156 April 2016 JEL No. D86,J33,J41 ABSTRACT We introduce a general Principal-Agent model with subjective evaluation and malfeasance However whereas the problem of constructing an optimal contract with subjective evaluation (which is defined simply as a signal in most papers) receives a large attention, firm-level evaluation Downloadable (with restrictions)! This paper extends the standard principal-agent model to allow for subjective evaluation. The optimal contract results in more compressed pay relative to the case with verifiable performance measures. Moreover, discrimination against an individual implies lower pay and performance, suggesting that the extent of discrimination as measured after controlling for NBER Program(s):Labor Studies Program, Technical Working Papers. We introduce a general Principal-Agent model with subjective evaluation and malfeasance characterized by two-sided asymmetric information on performance that allows for an arbitrary information structure. Two generic contract forms are studied.

Optimal Contracting with Subjective Evaluation Revisited Kong-Pin Chen Chien-Lung Cheny Szu-Hsien Hoz May 19, 2016 Abstract This paper revisits the property of the optimal contract of a static principal-agent relationship with subjective performance evaluations (MacLeod, 2003), but assuming that the principal and the agent receive correlated

of performance shapes the optimal incentive contract. In this setting, subjective evaluations are useful for incentive provision because they are based. Subjective performance evaluation, however, is also fraught with some problems Before deriving the optimal reports of the supervisor for inequality averse agents, we MacLeod, W. B. (2003): Optimal Contracting with Subjective Evaluation. If a measure of performance is subjective then it is inherently private. hazard problem on the Agent's side is combined with private evaluations on the Principal's We start by characterizing the optimal contract for a finite horizon problem. and Contract Enforcement” (Journal of Economics Literature, 2007); and “ Optimal Contracting with Subjective Evaluation” (American Economic Review, 2003). and Contract Enforcement”, Journal of Economics Literature (2007); and " Optimal Contracting with Subjective Evaluation," American Economic Review ( 2003). complementing objective performance evaluation with subjective assessment is optimal contract design for firms where workers are subjectively assessed by 

Optimal Contracting with Subjective Evaluation. This paper extends the standard principal-agent model to allow for subjecti~~e evaluation. The optimal contract results in more compressed pay relative to the case ~ith~,er(fiableperformance measures.

and Contract Enforcement”, Journal of Economics Literature (2007); and " Optimal Contracting with Subjective Evaluation," American Economic Review ( 2003). complementing objective performance evaluation with subjective assessment is optimal contract design for firms where workers are subjectively assessed by 

and Contract Enforcement” (Journal of Economics Literature, 2007); and “ Optimal Contracting with Subjective Evaluation” (American Economic Review, 2003).

Optimal Contracting with Subjective Evaluation. This paper extends the standard principal-agent model to allow for subjecti~~e evaluation. The optimal contract results in more compressed pay relative to the case ~ith~,er(fiableperformance measures. Optimal Contracting with Subjective Evaluation: The Effects of Timing, Malfeasance and Guile W. Bentley MacLeod and Teck Yong Tan NBER Working Paper No. 22156 April 2016 JEL No. D86,J33,J41 ABSTRACT We introduce a general Principal-Agent model with subjective evaluation and malfeasance However whereas the problem of constructing an optimal contract with subjective evaluation (which is defined simply as a signal in most papers) receives a large attention, firm-level evaluation Downloadable (with restrictions)! This paper extends the standard principal-agent model to allow for subjective evaluation. The optimal contract results in more compressed pay relative to the case with verifiable performance measures. Moreover, discrimination against an individual implies lower pay and performance, suggesting that the extent of discrimination as measured after controlling for NBER Program(s):Labor Studies Program, Technical Working Papers. We introduce a general Principal-Agent model with subjective evaluation and malfeasance characterized by two-sided asymmetric information on performance that allows for an arbitrary information structure. Two generic contract forms are studied. Optimal Contracting with Subjective Evaluation Revisited Kong-Pin Chen Chien-Lung Cheny Szu-Hsien Hoz May 19, 2016 Abstract This paper revisits the property of the optimal contract of a static principal-agent relationship with subjective performance evaluations (MacLeod, 2003), but assuming that the principal and the agent receive correlated

the value of subjective performance indicators for contracting purposes, the loss MacLeod, W. (2003), 'Optimal contracting with subjective evaluation'.

William Bentley MacLeod (born 1954) is a Canadian-American economist. He is the Sami Mnaymneh Professor of Economics and Professor of International and Public Affairs at Columbia University and an Affiliated Faculty at Columbia Law School. He is a specialist in the fields of law, labor and contract theory. " Optimal Contracting with Subjective Evaluation," American Economic  11 Oct 2018 The wage and communication pattern results from optimal contracting with standard preferences. To explain these empirical observations, I study  the value of subjective performance indicators for contracting purposes, the loss MacLeod, W. (2003), 'Optimal contracting with subjective evaluation'. MacLeod (2003), “Optimal Contracting with Subjective Evaluation,” American Economic Re- view. 2. Page 3. Innes (1990), “Limited Liability and Incentive 

Optimal Contracting with Subjective Evaluation Optimal Contracting with Subjective Evaluation Macleod, W. Bentley 2003-03-01 00:00:00 Abstract This paper extends the standard principal–agent model to allow for subjective evaluation. The optimal contract results in more compressed pay relative to the case with verifiable performance measures. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): 1I would like to thank Canice Prendergast for suggesting this problem and for helpful comments on a first draft. I also greatly appreciated the comments of Janet Currie and Jonathan Levin, and thank Mehdi Farsi for excellent This paper extends the standard principal-agent model to allow for subjective evaluation. Optimal Contracting with Subjective Evalutaion (AER 2003) Bentley MacLeod I Investigate the form of the optimal contract when it is based on the principal’s and the agent’s subjective signals. I The standard model of subjective evaluation assumes that signals to performance are common knowledge (but not Optimal Efficiency-Wage Contracts with Subjective Evaluation∗ Jimmy Chan† Bingyong Zheng‡ November 20, 2008 Abstract We study a T-period contracting problem where performance evaluations are subjec-tive and private. We find that the principal should punish the agent if he performs poorly in the future even when the evaluations were good Optimal contracts based on subjective performance evaluations and reciprocity in response to ego-threatening feedback and show how these conflicts might stabilize principal-agent relationships based on subjective performance evaluations. We consider a principal who wants to motivate an agent to spend effort on a project – a complex good ‘subjective’. We show that the optimal contract always relies not only on the public per-formance measure but also on subjective evaluation by the principal. Therefore, it has to address two incentive problems. On the one hand, the agent must be given incentives to exert effort.