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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! !
• 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
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This document was uploaded on 03/19/2014 for the course ECON 101 at University of British Columbia.
- Winter '13