Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93824
Authors: 
Budde, Jörg
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 206
Abstract: 
This paper investigates the role of variance analysis procedures in aligning objectives under the condition of distorted performance measurement. A riskneutral agency with linear contracts is analyzed, whereby the agent receives postcontract, pre-decision information on his productivity. If the performance measure is informative with respect to the agent's marginal product concerning the principal's objective, variance investigation can alleviate effort misallocation. These results carry over to a participative budgeting situation, but in this case the variance investigation procedures are less demanding.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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