A popular metaphor is that of a balanced scorecard, that a variety of measures should be used in…

A popular metaphor is that of a balanced scorecard, that a variety of measures should be used in evaluating a manager and that they should be treated in balanced fashion. Taking this literally, return to the multitask setting in Chapter 15, and especially the general setup in Examples 15.4 and 15.5. The firm seeks a balanced supply of input H to two underlying tasks. Two performance measures, specified in slightly different fashion than in Chapter 15, are available: x = a1 + αa2 + ε and y = γa1 + a2 + ε. As before, ε and ε are independent, normal random variables, and each has a variance of 10,000. Remaining details can be found in Examples 15.4 and 15.5.

((Example 15.4 Continue with the setting of Example 15.1. Recall that, with α = .7 and thus a performance measure of x = a1 + .7a2 + ε (and σ 2 = 10, 000), the cost to the firm of high input was C(H) = 80. We also know a balanced allocation of this input is infeasible here, as the single performance measure more heavily weights the first task. Suppose a second performance measure of y = a1 + .6a2 + ε along with σ 2 = 10, 000 is available. So γ = .6. If the manager is to equally value the two tasks, the balance requirement in (15.13) must hold, or

Solving program (15.12), but with this balance requirement appended provides an optimal solution of β ∗ 1 = .80, β ∗ 2 = −.60, ω ∗ = 460 and a cost to the firm of C(H) = 560. 14 Be certain you verify this solution, and understand how it motivates the desired behavior. First notice the manager has a balanced view of the two tasks, as β ∗ 1 + β ∗ 2 = .80 − .60 = .20 = .7β ∗ 1 + .6β ∗ 2 = .7(.80) − .6(.60). Second, the manager is willing to supply high input as doing so has no effect on his risk premium but does increase his expected compensation by his increased personal cost of cH − cL = 60. In particular, a balanced supply of H provides expected compensation of

Likewise, a balanced supply of L provides expected compensation of15

ω ∗ + .2L = ω ∗ + .2(200) = ω ∗ + 40

Third, accepting and behaving as instructed (and motivated), provides the manager a certainty equivalent of

But why has the firm’s cost increased so dramatically relative to the unbalanced case? This is the balance requirement at work. Both evaluation measures underweight the second task, and neutralizing this requires relatively large, counterbalancing incentive weights on the two measures, which leads to a dramatic increase in the manager’s compensation risk.

Example 15.5 Contrast Example 15.4 with a setting where everything remains as before except the second performance measure is biased in favor of the second task. γ = 1.2 will suffice. You should now find an optimal incentive function of β ∗ 1 = .1038, β ∗ 2 = .0962, ω ∗ = −29.986 and a cost to the firm of C(H) = 70.01. Here it is relatively easy to weight the two measures so as to provide the manager with balanced incentives, as one measure favors the first task and the other favors the second.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Online Academic Experts
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Health Care
The writer did not follow my choice of topic (Food/Water Insecurity, Hunger, & Poverty), the paper was instead written about Climate Change in Africa. However, the paper was still great and informative. Thank you!
Customer 452777, January 28th, 2022
It was gotten well after time I needed to make needed additions, but it is something that did help me. I could not get the concept of ho to start such a project but now reading this, I was over thinking the project it seems.
Customer 452801, July 19th, 2021
Business Studies
Thank you so much! I had to take my dog to the ER and had no time for the assignment. I really appreciate your help! I can't thank you enough! I really appreciate the work and integrity put into it. Thank you for taking it seriously and not bullshiting the paper.
Customer 452815, July 26th, 2021
Nice work
Customer 453185, May 21st, 2022
The writer was timely and proficient. I had to ask for a revision, but I got it back quickly with no other issues. Would use this essay writing service again
Customer 452441, November 14th, 2021
Thank you!!! I received my order in record timing.
Customer 452551, February 9th, 2021
Came in as promissed. Good paper.
Customer 453027, January 6th, 2022
Social Work and Human Services
Although it took 2 revisions I am satisfied but I did receive it late because of that.
Customer 452603, March 25th, 2021
Human Resources Management (HRM)
Always great! My son has been in critical health these last few semesters. Many times I have thought he wasn't going to make it and thought about quitting or postponing school until he was healthier but it always happens to be in the middle of the semester. This service has been a lifesaver for my mindset in helping keep my grades up and keep my son alive at the same time. I don't know if I could have made it through this period without it.
Customer 453077, June 6th, 2022
Thank you!
Customer 452545, February 6th, 2021
Business Studies
Thank you very much for a good job done and a quick turn around time.
Customer 452615, March 31st, 2021
Paper much better compared to the one prior revision request. References need to be no more than the past 5 years.
Customer 452547, July 20th, 2021
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Live ChatWhatsApp