Exam 16: Performance Measurement and Incentives in Firms

Which of the following terms best describes a review system in which an employee and a supervisor work together to construct a set of goals for that employee?

What term best describes a payment above and beyond the expected outcome of a gamble which must be offered to a risk-averse individual to willingly accept the gamble?

What term best describes an agent who is indifferent between a sure thing and a gamble of equal expected value?

Which of the following terms best describes a piece of information on which an incentive contract (explicit or implicit)can be based?

Which of the following phrases best describes the effect created when there is a mismatch between the total benefit to a team and the personal benefit to one team member such that the one team member's effort choices may not be the ones that maximize the teams overall welfare?

Which of the following terms best describes a review system in which an employee's supervisor,coworkers and subordinates are all asked to provide information regarding that employee's performance over a period of time?

Which of the following statements is least true regarding the use of incentive pay for sales employees?

What term best describes an agent who prefers a risky outcome with the same expected value over a sure thing?

What term refers to the practice in a multidivisional firm where orders from other parts of a company are rushed to be filled at the end of each month (allowing divisions filling the orders to recognize revenue but cause inventory problems)?

What term best describes the payment which must be offered to a risk-averse individual to willingly accept a gamble?

Which of the following terms describes a contract by which the value of the compensation depends on the measured performance of the employee?

Which of the following is least likely a technique firms can use to mitigate the free-rider problem?

Which of the following terms describes a phenomenon whereby individuals ignore their own information about the best course of action and instead simply do what everyone else is doing?

What term best describes an agent who prefers a sure thing to a gamble of equal expected value?

Which of the following terms describes an incentive contract that can be enforced by an outside third party such as a judge or an arbitrator?

Which of the following terms best describes a contract that guarantees an agent some payment,but provides enough incentive so that the agent does not shirk?

What term best refers to a wage payment made to an agent that exceeds his opportunity cost of working and discourages the agent from shirking?

What term best describes how a firm performs based on a comparison to another firm in its peer set within an industry?

Which of the following statements is untrue with regards to stock options as a form of incentives for employees?

Which of the terms best describes the effect that results from supervisors giving all their subordinates average (or above average)grading to avoid making sharp distinctions between those subordinates when evaluating them?