Quiz 4 Flashcards
1
Q
Organizational Architecture
A
Decision rights
Performance measurement
Reward system
2
Q
What determines performance?
A
Effort
Ability
Noise (random things)
3
Q
Agency cost =
A
Monitoring cost + bonding cost + residual loss
4
Q
Who pays for monitoring cost?
A
Principal
5
Q
Who pays bonding cost?
A
Agent
6
Q
Residual loss is…
A
Opportunity loss
7
Q
Sources of conflict (4)
A
Differences in preference for effort and prerequisites
Differences in decision horizon
Differences in the risk preferences
Differences in investment incentives
