Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94080
Authors: 
Giebe, Thomas
Gürtler, Oliver
Year of Publication: 
2008
Series/Report no.: 
SFB/TR 15 Discussion Paper 237
Abstract: 
We consider a situation where an agent's effort is monitored by a supervisor who cares for the agent's well being. This is modeled by incorporating the agent's utility into the utility function of the supervisor. The first best solution can be implemented even if the supervisor's preferences are unknown. The corresponding optimal contract is similar to what we observe in practice: The supervisor's wage is constant and independent of his report. It induces one type of supervisor to report the agent's performance truthfully, while all others report favorably independent of performance. This implies that overstated performance (leniency bias) may be the outcome of optimal contracts under informational asymmetries.
Subjects: 
Subjective performance evaluation
leniency
supervisor
private infrmation
JEL: 
D82
D86
J33
M52
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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