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Performance measurement, expectancy and agency theory : an experimental study

[journal article]

Sloof, Randolph; Praag, Mirjam van

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-263118

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Abstract Theoretical analyses of (optimal) performance measures are typically performed within the realm of the linear agency model. This model implies that, for a given compensation scheme, the agent’s optimal effort is unrelated to the amount of noise in the performance measure. In contrast, expectancy theory as developed by psychologists predicts lower effort levels for noisier performance measures. We conduct a real effort laboratory experiment and find that effort levels are invariant to changes in the distribution of the noise term. This suggests that enriching the economic model commonly applied within this area by including an expectancy parameter is not needed.
Classification Methods and Techniques of Data Collection and Data Analysis, Statistical Methods, Computer Methods
Free Keywords Performance measurement; Expectancy theory; Real effort experiments; Agency theory; Personnel economics
Document language English
Publication Year 2008
Page/Pages p. 794-809
Journal Journal of Economic Behavior & Organization, 67 (2008) 3-4
DOI http://dx.doi.org/10.1016/j.jebo.2007.09.003
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)