ACCT3206 Study Guide - Final Guide: Customer Retention, Sick Leave, Complex System
Document Summary
Learning to design incentive contracts in banks research paper 5 (bol and moers) This paper says a really interesting point about learning effect during the process of applying an incentive system. This is not the case in the simple agency theory, agency theory assumes that manager absolutely know the best way to manage resources and make profits rather than the principle. However, in realty, it"s not always the case, generally, managers also have 100 percent sure what kind of action will cause what kind of result. The process of observing, learning from partners, improving and making decisions is a dynamic learning. Over time, once adoption of the system has taken place in some of the banks, learning spillovers within the social network can occur and will lead to an exponential rate of adoption, with the benefits and costs becoming clearer. Question 2: 729 explains that complexity of the incentive system makes its use more difficult.
