Lecture Notes 14- Markets and Moral Sentiments

Corruption paying for some goods and services may

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Unformatted text preview: ets, luxury vacations)! ! Corruption: Paying for some goods and services may diminish their value and degrade attitudes or social norms! ! ! Incentives:! • Why do firms give bonuses?! • Ranking different incentive effects of different compensation schemes: Fixed wage(pay per hour), share contract(commission), fixed rental contract(all the money minus the initial rent)! • Y=W; Y=s.X(e) Y=X(e)-R! • The last scheme has the most incentive.! • Theory of the residual claimant and a theory of a classical firm.! • Some perverse effects of incentives - lack of attention paid to what cannot be measured and he...
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This document was uploaded on 03/19/2014 for the course ECON 101 at University of British Columbia.

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