In multi-action situation, there are losses of efficiency due to noise effect and incongruity effect. To isolate noise effect, we prove that the loss of efficiency is zero if and only if the objective of the principal...In multi-action situation, there are losses of efficiency due to noise effect and incongruity effect. To isolate noise effect, we prove that the loss of efficiency is zero if and only if the objective of the principal is a linear representation of the performance measures when the performance measures are noiseless. Using this result, several definitions of incongruity are given. Our definitions extend the single performance definition given in Feltham and Xie （1994） to multiple performance measures situation, and reconcile the conflict between the definition given in Datar et al. （2001） and that in Feltham and Xie （1994）. A numeric example is analyzed to show the way that the variances of measures and correlation coefficient between measures affect the utility of the principal.展开更多
基金This paper is part of National Natural Science Foundation of China （Program No. 70272011）.
文摘In multi-action situation, there are losses of efficiency due to noise effect and incongruity effect. To isolate noise effect, we prove that the loss of efficiency is zero if and only if the objective of the principal is a linear representation of the performance measures when the performance measures are noiseless. Using this result, several definitions of incongruity are given. Our definitions extend the single performance definition given in Feltham and Xie （1994） to multiple performance measures situation, and reconcile the conflict between the definition given in Datar et al. （2001） and that in Feltham and Xie （1994）. A numeric example is analyzed to show the way that the variances of measures and correlation coefficient between measures affect the utility of the principal.
