Incentive Conflicts and Contracts激励冲突和合同.pptVIP

Managerial Economics and Organizational Architecture, Chapter 10 Chapter 10: Incentive Conflicts and Contracts Brickley, Smith, and Zimmerman, Managerial Economics and Organizational Architecture, 4th ed. Incentive Conflicts and Contractslearning objectives Students should be able to Describe and offer examples of several kinds of incentive conflicts in firms State the role of contracts in reducing incentive conflicts Describe and offer examples of several pre- and postcontractual information problems Examples of incentive conflicts Owner versus manager profits or salaries and perks work hard or shirk take chances or play it safe Buyer versus supplier Free ride or not Management versus labor The role of contracts Costless contracting ideal contracts would align interests (minimize incentive conflicts) at no or low cost Costly contracting and asymmetric information contracts costly to negotiate, write, administer parties to contract have asymmetric information on performance levels Firm as focal point for set of contracts Postcontractual information problems Agency problems principal contracts with agent for service agent has postcontractual incentive to serve own perceived best interests Asymmetric information complicates resolution of agency problems principal incurs monitoring costs and/or agent incurs bonding costs Optimal combination of compensation and perks CEO utility function, C is compensation, P is perquisites: U=f(C,P) Owners have precise knowledge of profit potential: ?p Realized profits are: ?R=?p-P Therefore offer CEO compensation contract: C=S-(?p- ?R) Optimal perquisite taking Postcontractual information problems Agency problems principal contracts with agent for service agent has postcontractual incentive to serve own perceived best interests Incentives to economize on agency costs sharing increased gains from trade Agency Cost ExampleGood Tire Company and Brown Brown Good Tire’s marginal benefit from legal services: MB=200-2L Brown Brow