Letina, Igor; Liu, Shuo; Netzer, Nick (2020). Delegating performance evaluation. Theoretical economics, 15(2), pp. 477-509. The Econometric Society 10.3982/TE3570
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We study optimal incentive contracts with multiple agents when performance is evaluated by a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal fixes a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer’s potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap. Our analysis has implications for various applications, such as the design of worker compensation or the allocation of research grants.
Item Type: |
Journal Article (Original Article) |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics 03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Microeconomics |
UniBE Contributor: |
Letina, Igor |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
ISSN: |
1933-6837 |
Publisher: |
The Econometric Society |
Language: |
English |
Submitter: |
Dino Collalti |
Date Deposited: |
17 Jun 2020 08:40 |
Last Modified: |
05 Dec 2022 15:35 |
Publisher DOI: |
10.3982/TE3570 |
BORIS DOI: |
10.7892/boris.138742 |
URI: |
https://boris.unibe.ch/id/eprint/138742 |
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