EC4

Question 1

Senstiviy;

Answer 1

the extend to which the expected value of the pm changes with changes in the agents effort

Question 2

Precision

Answer 2

The extend to which the expected value of the pm is influenced outside of the control of the manager

Question 3

Verifiability:

Answer 3

To which extent is ex ante clear how the performance measure is calculated

Question 4

congruence

Answer 4

The extent to which the pm reflects contribution to overall firm value.

Question 5

Incentive effect of promotion:

Answer 5

a higher change on promotion leads to an increase in effect of the employee

Question 6

Intertemporal choice problem:

Answer 6

Managers have a high preference for action from which the benefits are realized at shorter term