Arbeitspapier
Communicating Subjective Evaluations
Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide some justifications by sending a costly message. Indeed, it is optimal for the principal to explain her evaluation to the agent if and only if the evaluation turns out to be bad. The justification guarantees the agent that the principal has not distorted the evaluation downwards. On the equilibrium path, as long as the principal provides a justification, the wage increases in the performance of the agent. For good performances, however, the principal pays a given high wage without providing justifications. This wage pattern fits empirical observations that subjective evaluations are lenient and discriminate poorly between good performances. I show that this pattern is part of the optimal contract instead of biased behavior. Furthermore, it is possible to implement the optimal contract in an ex-post budget-balanced way if stochastic contracts are feasible.
- Sprache
-
Englisch
- Erschienen in
-
Series: Preprints of the Max Planck Institute for Research on Collective Goods ; No. 2012/14
- Klassifikation
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Economics of Contract: Theory
Personnel Economics: Compensation and Compensation Methods and Their Effects
Labor Contracts
- Thema
-
Communication
Justification
Subjective evaluation
Stochastic contracts
Disclosure
Vertragstheorie
Prinzipal-Agent-Theorie
Informationsverhalten
Kommunikation
Bewertung
Spieltheorie
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Lang, Matthias
- Ereignis
-
Veröffentlichung
- (wer)
-
Max Planck Institute for Research on Collective Goods
- (wo)
-
Bonn
- (wann)
-
2013
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Lang, Matthias
- Max Planck Institute for Research on Collective Goods
Entstanden
- 2013
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