Pay for performance under hierarchical contracting
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- 作者：Jaeyoung Sung
- 关键词：Moral hazard ; Optimal contract ; Hierarchical contracting ; PPS ; D86 ; G34 ; L22
- 刊名：Mathematics and Financial Economics
- 出版年：2015
- 出版时间：June 2015
- 年：2015
- 卷：9
- 期：3
- 页码：195-213
- 全文大小：510 KB
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1. Department of Financial Engineering, Ajou University, Suwon, South Korea - 刊物类别：Mathematics and Statistics
- 刊物主题：Mathematics
Quantitative Finance
Finance and Banking
Financial Economics
Game Theory and Mathematical Methods
Applications of Mathematics
Statistics for Business, Economics, Mathematical Finance and Insurance - 出版者：Springer Berlin / Heidelberg
- ISSN：1862-9660
文摘
We consider a simple hierarchical contracting problem where the principal contracts the top manager who in turn subcontracts many middle managers. We show that that the top managerial contract is lower-powered and middle managerial contracts are higher-powered in incentives than predicted by the standard agency model. Consequently, at optimum, middle managers work harder, and the CEO (top manager) works less than implied by their standard second-best contracts. Moreover, the CEO contract sensitivity decreases as the number of middle managers increases.