财务管理---责任管理模式.ppt

* * * * * * * * * * Explain the Table. The higher the effort, the more LIKELY a good payoff. Emphasize the a good payoff ($55,000) CAN happen despite a low effort E3. Conversely, a high effort does not GUARRANTEE high payoff. * Point out that the X is a positive utility and e is a negative utility (disutility). Question 1: As the principal, of course I would demand e1 which will give me the best chance to get the higher payoff of $55.000. Question 2: If I can observe effort at all time, I would require that I will pay the agent, if and only if, I can observe that he/she is indeed giving me e1