Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89243
Authors: 
Tichem, Jan
Year of Publication: 
2013
Series/Report no.: 
Tinbergen Institute Discussion Paper 13-196/VII
Abstract: 
This paper studies how firms can efficiently incentivize supervisors to truthfully report employee performance. To this end, I develop a dynamic principal-supervisor-agent model. The supervisor is either selfish or altruistic towards the agent, which is observable to the agent but not to the principal. The analysis yields two key results. First, supervisor altruism sometimes provides a net incentive to report performance truthfully, rather than to bias evaluations upward. The intuition is that an altruistic supervisor values his job because of his good relationship with the agent, and puts his job at risk by overrating the agent's performance. Second, I show that by screening for one supervisor type, firms can incentivize the supervisor to truthfully report performance at the lowest possible costs. For this reason, screening may be optimal, even though it reduces the probability that vacancies are filled.
Subjects: 
Altruism
incentives
leniency bias
screening
subjective performance evaluation
supervisor
JEL: 
D86
J33
M52
M55
Document Type: 
Working Paper

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