Abstract
In multiple-task agency setups it is commonly accepted that wage incentives must be weaker when the agent's performance on some of the activities is difficult to measure. This article shows that stronger incentives can be restored through a scheme of selective audits in which the appraisal of less tangible activities is contingent on observing high performance levels in the more visible tasks. This scheme would make the efforts expended on the various tasks complementary rather than substitutes in the agent's utility function. It is optimal under plausible assumptions concerning the monitoring technology (separability of the multivariate likelihood function) and the agent's risk behavior (absolute prudence larger than three times absolute risk aversion). Then Etienne began to read him the announcement. It was a notice from the Company to the miners of all the pits, informing them that in consequence of the lack of care bestowed on the timbering, the Company had resolved to apply a new method of payment for the extraction of coal. Henceforward the price of the tub of coal extracted would be lowered, from fifty centimes to forty, and the Company itself would pay for the timber.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
