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No.4 On the Performance of Quota-based Compensation Scheme for Heterogeneous Salesforces >

Please use this identifier to cite or link to this item: http://hdl.handle.net/11266/6595

Title: On the Performance of Quota-based Compensation Scheme for Heterogeneous Salesforces
Authors: Watabe, Masahiro
渡部, 真弘
Keywords: piece-rate contract
quota-based contract
complexity of contracts
private information
worker heterogeneity
Issue Date: 7-May-2018
Publisher: 立正大学経済学会
Abstract: This paper examines the performance of quota-based compensation scheme relative to the menu of linear contracts in a principal-agent problem under moral hazard and adverse selection. A firm compensates heterogeneous workers based on uncertain outcomes of the worker’s private skill and effort. I derive an analytical expression for the performance measure of simple contract and provide explicit upper and lower bounds on the relative performance. A primary finding is that a properly designed simple piece-wise-linear-threshold contract always captures more than 73 percent of the incremental gain secured under the optimal menu of linear contracts on the entire region of the relevant parameter values.
URI: http://hdl.handle.net/11266/6595
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