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Schöndube JR (2008). Early Versus Late Effort in Dynamic Agencies with Unverifiable Information. BuR - Business Research, Vol. 1, Iss. 2, pp. 165-186, URN: urn:nbn:de:0009-20-16513
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%0 Journal Article %T Early Versus Late Effort in Dynamic Agencies with Unverifiable Information %A Schöndube, Robert Jens %J BuR - Business Research %D 2008 %V 1 %N 2 %@ 1866-8658 %F schöndube2008 %X In this paper we analyze a dynamic agency problem where contracting parties do not know the agent's future productivity at the beginning of the relationship. We consider a two-period model where both the agent and the principal observe the agent's second-period productivity at the end of the first period. This observation is assumed to be non-verifiable information. We compare long-term contracts with short-term contracts with respect to their suitability to motivate effort in both periods. On the one hand, short-term contracts allow for a better fine-tuning of second-period incentives as they can be aligned with the agent's second-period productivity. On the other hand, in short-term contracts first-period effort incentives might be distorted as contracts have to be sequentially optimal. Hence, the difference between long-term and short-term contracts is characterized by a trade-off between inducing effort in the first and in the second period. We analyze the determinants of this trade-off and demonstrate itsimplications for performance measurement and information system design. %L 330 %K accounting %K performance measurement %U http://nbn-resolving.de/urn:nbn:de:0009-20-16513 %P 165-186
Bibtex
@Article{schöndube2008,
author = "Sch{\"o}ndube, Robert Jens",
title = "Early Versus Late Effort in Dynamic Agencies with Unverifiable Information",
journal = "BuR - Business Research",
year = "2008",
volume = "1",
number = "2",
pages = "165--186",
keywords = "accounting",
keywords = "performance measurement",
abstract = "In this paper we analyze a dynamic agency problem where contracting parties do not know the agent's future productivity at the beginning of the relationship. We consider a two-period model where both the agent and the principal observe the agent's second-period productivity at the end of the first period. This observation is assumed to be non-verifiable information. We compare long-term contracts with short-term contracts with respect to their suitability to motivate effort in both periods. On the one hand, short-term contracts allow for a better fine-tuning of second-period incentives as they can be aligned with the agent's second-period productivity. On the other hand, in short-term contracts first-period effort incentives might be distorted as contracts have to be sequentially optimal. Hence, the difference between long-term and short-term contracts is characterized by a trade-off between inducing effort in the first and in the second period. We analyze the determinants of this trade-off and demonstrate itsimplications for performance measurement and information system design.",
issn = "1866-8658",
url = "http://nbn-resolving.de/urn:nbn:de:0009-20-16513"
}
RIS
TY - JOUR AU - Schöndube, Robert Jens PY - 2008// TI - Early Versus Late Effort in Dynamic Agencies with Unverifiable Information JO - BuR - Business Research SP - 165 EP - 186 VL - 1 IS - 2 KW - accounting KW - performance measurement N2 - In this paper we analyze a dynamic agency problem where contracting parties do not know the agent's future productivity at the beginning of the relationship. We consider a two-period model where both the agent and the principal observe the agent's second-period productivity at the end of the first period. This observation is assumed to be non-verifiable information. We compare long-term contracts with short-term contracts with respect to their suitability to motivate effort in both periods. On the one hand, short-term contracts allow for a better fine-tuning of second-period incentives as they can be aligned with the agent's second-period productivity. On the other hand, in short-term contracts first-period effort incentives might be distorted as contracts have to be sequentially optimal. Hence, the difference between long-term and short-term contracts is characterized by a trade-off between inducing effort in the first and in the second period. We analyze the determinants of this trade-off and demonstrate itsimplications for performance measurement and information system design. SN - 1866-8658 UR - http://nbn-resolving.de/urn:nbn:de:0009-20-16513 ID - schöndube2008 ER -
Wordbib
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ISI
PT Journal AU Schöndube, RJ TI Early Versus Late Effort in Dynamic Agencies with Unverifiable Information SO BuR - Business Research PY 2008 BP 165 EP 186 VL 1 IS 2 DE accounting; performance measurement AB In this paper we analyze a dynamic agency problem where contracting parties do not know the agent's future productivity at the beginning of the relationship. We consider a two-period model where both the agent and the principal observe the agent's second-period productivity at the end of the first period. This observation is assumed to be non-verifiable information. We compare long-term contracts with short-term contracts with respect to their suitability to motivate effort in both periods. On the one hand, short-term contracts allow for a better fine-tuning of second-period incentives as they can be aligned with the agent's second-period productivity. On the other hand, in short-term contracts first-period effort incentives might be distorted as contracts have to be sequentially optimal. Hence, the difference between long-term and short-term contracts is characterized by a trade-off between inducing effort in the first and in the second period. We analyze the determinants of this trade-off and demonstrate itsimplications for performance measurement and information system design. ER
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Full Metadata
| Bibliographic Citation | BuR - Business Research, Vol. 1, Iss. 2, pp. 165-186 |
|---|---|
| Title | Early Versus Late Effort in Dynamic Agencies with Unverifiable Information (eng) |
| Author | Jens Robert Schöndube |
| Language | eng |
| Abstract | In this paper we analyze a dynamic agency problem where contracting parties do not know the agent's future productivity at the beginning of the relationship. We consider a two-period model where both the agent and the principal observe the agent's second-period productivity at the end of the first period. This observation is assumed to be non-verifiable information. We compare long-term contracts with short-term contracts with respect to their suitability to motivate effort in both periods. On the one hand, short-term contracts allow for a better fine-tuning of second-period incentives as they can be aligned with the agent's second-period productivity. On the other hand, in short-term contracts first-period effort incentives might be distorted as contracts have to be sequentially optimal. Hence, the difference between long-term and short-term contracts is characterized by a trade-off between inducing effort in the first and in the second period. We analyze the determinants of this trade-off and demonstrate its implications for performance measurement and information system design. |
| Subject | accounting, performance measurement |
| DDC | 330 |
| Rights | authorcontract |
| URN: | urn:nbn:de:0009-20-16513 |
