Economics of Strategy Besanko Dranove Shanley and Schaefer
Economics of Strategy Besanko, Dranove, Shanley and Schaefer, 4 th Edition Chapter 14 Agency and Performance Measurement Slide show prepared by Richard Ponarul California State University, Chico John Wiley Sons, Inc.
The Principal/Agent Framework How does a firm make its employees work to advance the firm’s strategy? 기업이 어떤 유 인을 제공함으로써 근로자들로 하여금 기업이 원하는 행동을 이끌어 내어 기업의 이윤을 극 대화 할 수 있는가? l The principal/agent framework is useful in addressing this question - Framework: Principal hires the agent to take actions that affect the payoff to the principal l
Typical Principal/Agent Situations Principal Agent Litigant소송당사자 Lawyer Shareholder CEO Manager Subordinate
Agency Problems l l l Principal gets value created by agent’s action minus payment to agent Agent looks at his/her payment less the cost of his/her effort Conflict arises if there is no mechanism to align the interests of the two parties
Mechanism to Resolve Conflicts l There are several means used to align the employee's interest with that of the employer – – – Bonuses Raises Profit sharing Stock options Future promotion Threat of firing
Explicit Incentive Contracts l Contracts can be based on “performance measures( 성과 척도)” – – – l Sales growth Production Contracts can also be based on “input-based measures” – – Number of patients seen: 의사들이 진료시간을 효율적으로 사용하도록 유인 Number of students enrolled: 학원강사는 학생수에 따라 보 상을 받음으로 열심히 가르쳐서 유명 강사가 되려는 유인이 강함
C(e) C(e 1) C(e 0) 40 e 1
Numerical Example (Continued) l l Each unit of effort brings in $100 in revenue Employee’s alternative is a no-extra-effort job that pays $1000. 인센티브 제도가 없다면 근로자들은 40 단위의 노력을 제공하고 월 $1000달러를 임금으로 지 급받음 Employer wants to offer a incentive package that makes the job barely more attractive than the alternative Employer wants to maximize profits
1000+0. 1*(100 e) C(e) 40 50
기대효용 이론 Expected Utility Theory U(1500) U(1000) E(U) U(500) Certainty equivalent 500 1000 1500
Risk Aversion l l l A risk averse person prefers a sure $1000 over getting $1500 and $500 with equal probabilities: 한계효용 체감의 법칙 Certainty equivalent is the dollar amount a risk averse person will accept in lieu of the uncertain payoff A risk averse person may consider a sure $900 of the same value as getting $1500 or $500 with equal probabilities
Risk Sharing l l l Risk averse persons can improve their situation through risk sharing Principle behind insurance – pooling of risk 상기 예에서 Certaitny equivalent가 900원이 라면, 경기가 좋을 때 550원을 제하고 경기가 나쁠 때 450원을 채워서 항상 소득이 950원이 유지되도록 해 주는 보험회사가 있다면 이 사 람은 분명히 보험에 가입
Risk Sharing – Numerical Example Assume certainty equivalent wage is, l l l measures risk aversion Higher means lower certainty equivalent wage E(wage)= Expected value of wage payment Var(wage)= Variance of wage payment: 리스크를 측정 상기 식은 리스크 프레미엄을 임금의 변동성을 측정하 는 분산 Var(wage)으로 측정할 수 있다고 가정한 수식 임
Risk Sharing – Numerical Example l Let sales have a random component l The Noise term has zero mean and variance of Var(wage)=Var(α(100 e+ε))= 리스크 프리미엄=1/2ρVar(wage)= l l
Risk Sharing – Numerical Example l l Let be the base pay Let be the commission rate Certainty equivalent pay If is increased beyond a certain level, the risk premium increases, reducing the profit
적정 성과급의 결정 위험과 인센티브의 관계 (표를 계산하는데 분산은 10000, 위험회피 계수 ρ=3을 가정함. 또한 이 근로자가 다른 직장에서 1000달러를 받을 수 있다고 가정) 성과급 비율 Effort level Effort costs Risk commi salary premi ssion um 총수입 profits 0% 40 0 1000 4000 3000 10% 50 50 150 500 700 5000 3800 20% 60 200 600 1200 6000 4200 25% 65 312. 5 937. 5 1625 6500 4250 30% 70 450 1350 2100 7000 4200
Limitations of Performance Measures If employee is engaged in multiple tasks he/she may focus on task that brings more reward - Typical performance measures may not capture all aspects of performance l 다기능 업무를 수행해야 하는 경우 유인이 연 계된 업무에만 집중하고 유인이 연계되지 않 은 업무는 소홀히 할 가능성 l
Selecting Performance Measures l A good measure: Should not have a huge random component – Should encourage desirable activities – Should discourage undesirable activities ↔ 그러나 이러한 세가지 조건을 모두 만족시키는 성과척도는 찾기 어 려움 – l Measures could be: – – l l Absolute measures Relative measures reduce risk due to common effects Relative measures may also encourage sabotage 상대적 평가 는 다른 사람의 평가가 나빠져야 나의 평가가 좋아지게 됨으로 상호 협력을 저해하는 부작용이 크게 나타남
- Slides: 35