Performance measure congruity in linear agency models with interactive tasks

Budde, Jörg (November 2006): Performance measure congruity in linear agency models with interactive tasks. SFB/TR 15 Discussion Paper No. 204

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.

• Item Type: Paper (Discussion Paper)
• Keywords: incentives, multi-tasking, performance measurement
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > B4 - Die Gestaltung von Turnieren im Rahmen der Corporate Governance
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D82, M52
• Language: English