International Journal of Business and Economics Volume 6, No. 1 April​, 2007

Performance Measurement Technologies and the Trade-off of Risk and Incentives

Oliver Gürtler

Department of Economics, University of Bonn, Germany

Abstract

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.

Keywords：complements, risk, incentive strength, performance measurement system.

JEL Classifications：D81, J33, M52.

BACK