bonus scheme

What is the Principal’s cost of implementing effort at the optimum? Discuss your result.

2. A risk neutral worker engages in two different tasks, task 1 and task 2. Let r 1 and (.2 denote the effort he exerts in each, respectively, and assume r1 -I- f’2 I. Effort is privately known only to the worker and also costly to exert. The agent’s cost of effort is defined by […]

Scroll to top