Performance Pay and Adverse Selection*
研究了企业通过绩效薪酬吸引高生产率员工时，员工自选择带来的企业收益可能无法转化为社会收益，导致激励合同过度强化、高生产率员工努力过度并增加代理成本。
Abstract It is well known in personnel economics that firms may improve the quality of their workforce by offering performance pay. We analyze an equilibrium model where worker productivity is private information and show that the firms’ gain from worker self‐selection may not be matched by a corresponding social gain. In particular, the equilibrium incentive contracts are excessively high‐powered, thereby inducing the more productive workers to exert too much effort and increasing agency costs stemming from the misallocation of effort.