CIRJE-F-419 | "Relative Performance Evaluation between Multitask Agents" |
Author Name | Matsushima, Hitoshi |
Date | April 2006 |
Full Paper | PDF file@ |
Remarks | @ |
Abstract |
We investigate the moral hazard problem in which the principal delegates multiple
tasks to two agents. She imperfectly monitors the action choices by observing the public
signals that are correlated through the macro shock and that satisfy conditional
independence. When the number of tasks is sufficiently high, relative performance
evaluation functions effectively for unique implementation, where the desirable action
choices are supported by an approximate Nash equilibrium, and any approximate Nash
equilibrium virtually induces the first-best allocation. Thus, this is an extremely
effective method through which the principal divides the workers into two groups and
makes them compete with each other.
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