Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94158
Authors: 
Budde, Jörg
Year of Publication: 
2013
Series/Report no.: 
SFB/TR 15 Discussion Paper 444
Abstract: 
Earlier studies show that contracts under subjective performance evaluation are dichotomous and punish only worst performance. I show that with limited liability payments need not be binary. More importantly, if the agent earns a rent from limited liability, the optimal contract distinguishes only signals of good news and bad news of the agent's action.
Subjects: 
bonus
monotone likelihood ratio
wage compression
JEL: 
D82
M52
M54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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