Performance Pay as a Screening Device

Marc C Chopin, C. T. Schulman

Research output: Contribution to journalReview article

1 Scopus citations

Abstract

Analysis of management compensation has focused on the principal — agent problem. We address the problem confronting owners who must choose a manager without knowing the productivity of individual managers. We find performance contingent contracts may result in a separating equilibrium in which high productivity managers accept contracts low productivity managers find unacceptable.

Original languageEnglish (US)
Pages (from-to)94-108
Number of pages15
JournalStudies in Economics and Finance
Volume18
Issue number2
DOIs
StatePublished - Feb 1 1998
Externally publishedYes

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ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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