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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Delegating performance evaluation |
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| Authors |
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| Language |
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| Institution | University of Zurich |
| Series Name | Working paper series / Department of Economics |
| Number | 266 |
| ISSN | 1664-7041 |
| Number of Pages | 65 |
| Date | 2018 |
| Abstract Text | We study optimal incentive contracts with multiple agents when performance evaluation is delegated to a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal determines a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer's potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap. Our analysis has implications for applications as diverse as the design of worker compensation, the awarding of research grants, and the allocation of foreign aid. |
| Free access at | Related URL |
| Official URL | http://www.econ.uzh.ch/static/workingpapers.php?id=945 |
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| Keywords | Performance evaluation, delegation, optimality of contests, Spieltheorie, Agency-Theorie, Leistungsbeurteilung, Delegation, Ressourcenallokation |
| Additional Information | Revised version |