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 language||English (US)|
|Number of pages||15|
|Journal||Studies in Economics and Finance|
|State||Published - Feb 1 1998|
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)