Citation

Discussion Paper Details

Please find the details for DP1107 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Performance Comparisons and Dynamic Incentives

Author(s): Margaret A Meyer and John Vickers

Publication Date: January 1995

Keyword(s): Incentives, Performance Comparisons and Rachet Effect

Programme Area(s): Industrial Organization

Abstract: It is well known that comparative performance information (CPI) can enhance efficiency in static principal-agent relationships by improving the trade-off between insurance and incentives in the design of explicit contracts. In dynamic settings, however, there may be implicit as well as explicit incentives (e.g. managerial career concerns and the ratchet effect in regulation). We show that the dynamic effects of CPI on implicit incentives can either reinforce or oppose the familiar (static) insurance effect and can in either case be the dominant factor affecting efficiency. The overall welfare effects of CPI are thus ambiguous and can be characterized in terms of the underlying information structure.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1107

Bibliographic Reference

Meyer, M and Vickers, J. 1995. 'Performance Comparisons and Dynamic Incentives'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1107