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https://hdl.handle.net/2440/120288
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Type: | Journal article |
Title: | Optimal contracts for research agents |
Author: | Shan, Y. |
Citation: | RAND Journal of Economics, 2017; 48(1):94-124 |
Publisher: | Wiley |
Issue Date: | 2017 |
ISSN: | 1756-2171 1756-2171 |
Statement of Responsibility: | Yaping Shan |
Abstract: | We study the agency problem between a firm and its research employees under several scenarios characterized by different Research and Development (R&D) unit setups. In a multiagent dynamic contracting setting, we describe the precise pattern of the optimal contract. We illustrate that the optimal incentive regime is a function of how agents' efforts interact with one another: relative performance evaluation is used when their efforts are substitutes, whereas joint performance evaluation is used when their efforts are complements. The optimal contract pattern provides a theoretical justification for the compensation policies used by firms that rely on R&D. |
Rights: | © 2017, The RAND Corporation |
DOI: | 10.1111/1756-2171.12169 |
Published version: | http://dx.doi.org/10.1111/1756-2171.12169 |
Appears in Collections: | Aurora harvest 8 Economics publications |
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