USING COST OBSERVATION TO REGULATE A MANAGER WHO HAS A PREFERENCE FOR EMPIRE-BUILDING

• Tipo: Artigo em Revista Científica Internacional
• Data: 2011

Autores

Ana P. Borges (Autor) FEP; João Correia-da-Silva (Autor) FEP

Revista

Título: Manchester School

Vol. 79

Páginas: 29-44

ISSN: 1463-6786

Editora: Wiley-Blackwell

Indexação

ISI Web of Knowledge - 2 Citações

ISI Web of Science

Scopus - 3 Citações

Econlit

Classificação Científica

FOS: Ciências sociais > Economia e gestão

CORDIS: Ciências Sociais

Outras Informações

ID Authenticus: P-002-XVV

DOI: 10.1111/j.1467-9957.2010.02224.x

Abstract (EN): We study regulation of a manager who has a preference for empire-building (high output), in the presence of moral hazard (unobservable effort) and adverse selection (unobservable productivity). We find that the optimal contract is linear in cost, being composed by a fixed payment plus a partial cost reimbursement. The preference for higher output reduces the manager's tendency to announce that his or her productivity is low, allowing a more powered incentive scheme (a lower fraction of the cost is reimbursed), which alleviates the problem of moral hazard.

Idioma: Inglês

Tipo (Avaliação Docente): Científica

Nº de páginas: 16