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Volume 6, No. 1,
April 2007
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Performance
Measurement Technologies and the Trade-off of Risk and
Incentives
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Oliver Gürtler*
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Department of Economics, University of Bonn,
Germany
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Abstract
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This paper analyzes a principal's decision of when to
invest in a performance measurement technology.
Interestingly, higher risk may make such an investment
less likely. In this case, the strength of incentives
certainly decreases. If, however, an increase in risk
induces an initially non-investing principal to invest,
incentive strength may increase.
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Key words
:
complements; risk; incentive strength;
performance
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measurement system
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JEL classification
:
D81; J33; M52
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