Costs and benefits of discretion in performance evaluation and patterns of bias / Max-Frederik Neubert, Barbara Schöndube-Pirchegger
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Discovery
1944914846
URN
urn:nbn:de:gbv:3:2-123456789-1167410
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Magdeburg : Otto-von-Guericke-Universität Magdeburg, Faculty of Economics and Management, 2025
Umfang
1 Online-Ressource (31 Seiten, 0,52 MB) : Diagramme
Ausgabevermerk
Sprache
eng
Anmerkungen
Inhaltliche Zusammenfassung
This paper investigates incentive effects from subjective performance evaluation (SPE) in an agency setting. An employee (agent) is evaluated by his superior (principal) via a subjective, potentially biased, performance report. We assume that this subjectiveness in evaluation affects the utility of both players, causing costs from biasing the report to the principal and benefits (costs) from over- (under-) evaluation to the agent. If the superior chooses the reporting bias sequentially optimal, we find that benefits from subjective, as opposed to objective performance measurement, do not outweigh its costs. If, in contrast, the supervisor is able to commit to an ex ante optimal bias choice, SPE can be beneficial if the agent’s preference for over-evaluation is sufficiently strong. While a centrality bias arises independent from the supervisor’s ability to commit, a leniency bias results only along with an ex ante optimal bias.
Schriftenreihe
Working paper series. Otto von Guericke Universität Magdeburg, Faculty of Economics and Management ; 2025, no. 03 ppn:58927368X