Exam 12: Performance Measurement and Incentives

Given an employee cost of effort function (where e is given in hours worked per week and each unit of e produces an extra $100 in sales): What is the cost of effort for a 37 hour week? What is the cost of effort for a 43 hour week? If the firm offers a salary only job of $500 per week,what is the employee's payoff net of effort costs for a 49 hour work week?

Which of the following management actions reflects agency problems due to the fact that information held by the agent is hard to observe?

Which of the following factors is an effective tool for companies to use to mitigate hidden action and hidden information problems in agency relationships?

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 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?

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

What type of organizational structure is typically used in planning courses for an MBA program?

Given an employee cost of effort function (where e is given in hours worked per week and each unit of e produces an extra $100 in sales): If the firm offers a salary-plus-commission job of $500 per week plus 20% of sales,what is the employee's marginal benefit of effort? How much more will the employee work than the standard 40 hour work week? What is the employee's actual salary when they work to maximize their payoff?

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?

Given an employee cost of effort function (where e is given in hours worked per week and each unit of e produces an extra $100 in sales): If the firm offers a salary-plus-commission job of $400 per week (instead of $500)plus 20% of sales,at what effort level does the employee maximize their payoff?

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

Relative performance is best described as which of the following??

Which of the following terms best describes the principle stating that when allocating effort among a variety of tasks,employees will tend to exert more effort toward those tasks that are rewarded?

Which of the following is a tool a firm can use to combat agency problems?

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?

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

What term best refers to a wage payment made to an employee that is large enough for the employee to purchase the median amount of personal goods and services?

Which of the following terms describes a contract based on information that cannot be observed by courts or arbitrators?

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?

Given an employee cost of effort function (where e is given in hours worked per week and each unit of e produces an extra $100 in sales): If the firm offers a salary-plus-commission job of $500 per week plus 20% of sales,how can we write the employee's payoff function? What is the employee's total compensation for working a 46 hour workweek (Note: This is the compensation and not payoff net of effort costs)?