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Adverse specialization

delete2001-08-01
delete58
PRE
AI
G
Glenn MacDonald *
L
Leslie M. Marx
DOI：10.1086/322084delete
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Abstract

Abstract

En 中文
We analyze a multiple-activity, principal-agent model in which the activities are naturally substitutable for the agent and complementary for the principal. A basic result is that the optimal compensation must cause the agent to view the activities as complements. This complementarity is achieved by employing a compensation scheme that is typically nonmonotone and makes success on multiple dimensions the sole source of large rewards. A number of empirical implications follow, along with explanations for some existing empirical findings. We also discuss applications to compensation in specific occupations.
Keywords:
INVESTMENT OPPORTUNITY SET
PRINCIPAL-AGENT PROBLEM
INCENTIVE CONTRACTS
COMPENSATION POLICIES
PERFORMANCE PAY
LABOR CONTRACTS
FIRM
ASSIGNMENT
PROVISION
DIVIDEND
AI Summary

AI Summary

Key information extracted from the uploaded paper, including a brief overview, abstract, background, key highlights, visual analysis, and future outlook.

Journal

Journal of Political Economy cover
Journal of Political Economy
IF:
6.3
Papers:
2.6K
Citations:
3.2W

Organization

No organization information available