Search results for "Principal-agent model"
showing 2 items of 2 documents
Selection and Gratitude: Anonymity and gratitude
2018
What kind of candidate is selected into a job when the principal has to appoint a committee to measure the candidate's ability and select a winner through a call specifying a wage for the job? In a model where the principal fixes the wage anticipating the committee's choice, under a rather natural assumption about the committee's objective we find that if the committee takes into account the candidate's gratitude a candidate with less than first best ability will be selected in equilibrium. First best selection is achieved if the committee is anonymous to the candidates. If the committee could also set the wage the first best candidate would be selected, but the principal would be worse off…
Are you a Good Employee or Simply a Good Guy? Infl?uence Costs and Contract Design.
2012
We develop a principal-agent model with a moral hazard problem in which the principal has access to a hard signal (the level of output) and a soft signal (the supervision signal) about the agent?s level of effort. We show that the agent?'s ability to manipulate the soft signal increases the cost of implementing the effcient equilibrium, leading to wage compression when the infl?uence cost is privately incurred by the agent. When manipulation activities negatively affect the agent?s productivity through the level of output, the design of infl?uence-free contracts that deter manipulation may lead to high-powered incentives. This result implies that high-productivity workers face incentive sch…