Margaret A. Meyer

Performance Comparisons and Dynamic Incentives

It is well known that comparative performance information (CPI) can enhance efficiency in static principal‐agent relationships by improving the trade‐off between insurance and incentives in the design of explicit contracts. In dynamic settings, however, there may be implicit as well as explicit incentives, for example, managerial career concerns and the ratchet effect in regulation. We show that the dynamic effects of CPI on implicit incentives can either reinforce or oppose the familiar (static) insurance effect and in either case can be more important for efficiency. The overall welfare effects of CPI are thus ambiguous and can be characterized in terms of the underlying information structure.

Limited intertemporal commitment and job design

Abstract The paper shows that some of the guidelines for job design that emerge from a static analysis of the multitask agency problem can be overturned in a dynamic model with limited commitment. Static analyses have shown that it is optimal to assign workers sole responsibility for tasks, and to allocate them tasks which are as homogeneous as possible with respect to the ease of measuring performance. Our dynamic analysis demonstrates that it can, instead, be optimal to make workers jointly responsible for tasks, and to make their task portfolios as similar to one another, but as internally diverse, as possible.

Cooperation and competition in organizations: A dynamic perspective

Abstract In static principal-agent relationships, cooperation and competition among agents both yield higher welfare than independent compensation — both modes of job design improve the tradeoff between risk and explicit incentives. In dynamic settings, welfare is also affected by implicit incentives, in particular, the ratchet effect. I characterize the effects of job design decisions on implicit incentives, showing that they differ in nature from explicit incentive effects and may be the dominant ones. Even if a decision about job design improves the static risk/incentive tradeoff, it may worsen the ratchet effect by so much that welfare falls.

Increasing interdependence of multivariate distributions

Orderings of interdependence are useful in many economic contexts: in assessing ex post inequality under uncertainty; in comparing multidimensional inequality; in valuing portfolios of assets or insurance policies; and in assessing systemic risk. We explore five orderings of interdependence for multivariate distributions: greater weak association, the supermodular ordering, the convex-modular ordering, the dispersion ordering, and the concordance ordering. For two dimensions, all five are equivalent, whereas for three dimensions, the first four are strictly ranked and the last two are equivalent, and for four or more dimensions, all five are strictly ranked. For the special case of binary random variables, we establish some equivalences among the orderings.

Consistent conjectures equilibria: A reformulation showing non-uniqueness

Abstract We interpret both Bresnahans original (1981) definition of consistent conjectures equilibria and his generalized (1983) definition as dominant strategy equilibria in reaction functions. We employ a simple constructive argument to show that every outcome satisfies the generalized definition.