Push or pull? Performance-pay,incentives, and information |
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| Authors: | David Rietzke Yu Chen |
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| Institution: | 1. Lancaster University;2. University of Graz
Yu Chen unexpectedly passed away in early 2019. He was a great friend and coauthor, and will be sincerely 3. missed. |
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| Abstract: | We study a principal-agent model wherein the agent is better informed of the prospects of the project, and the project requires both an observable and unobservable input. We characterize the optimal contracts, and explore the trade-offs between high- and low-powered incentive schemes. We discuss the implications for push and pull programs used to encourage Research and Development (R&D) activity, but our results are relevant in other contexts. |
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