Question 1

What is a key factor in determining how a firm resolves coordination problems?

Accepted Answer

A) Incentive based pay 
B) Effective IT systems 
C) Firm culture 
D) Alignment of goals 
E) Organizational structure 
A) Incentive based pay 
B) Effective IT systems 
C) Firm culture 
D) Alignment of goals 
E) Organizational structure

Question 2

Which of the following is not a characteristic of performance based pay?

Accepted Answer

A) The slope of the relationship between pay and performance for an employee provides incentives for effort, not the level of pay 
B) Employees will always prefer performance based pay thus aligning principal/agent objectives 
C) The overall value maximizing effort level for an employee occurs when personal marginal benefit equals personal marginal cost 
D) Performance based pay can resolve hidden information problems 
E) Pay contracts approaching 100% commission and negative salaries can occur 
A) The slope of the relationship between pay and performance for an employee provides incentives for effort, not the level of pay 
B) Employees will always prefer performance based pay thus aligning principal/agent objectives 
C) The overall value maximizing effort level for an employee occurs when personal marginal benefit equals personal marginal cost 
D) Performance based pay can resolve hidden information problems 
E) Pay contracts approaching 100% commission and negative salaries can occur

Question 3

Given an employee cost of effort function (where e is given in hours worked per week and each unit of e produces an extra $100 in sales):
c(e)= 0 if e40
If the firm offers a salary-plus-commission job of $500 per week plus 20% of sales,how can we write the employee's payoff function? What is the employee's total compensation for working a 46 hour workweek (Note: This is the compensation and not payoff net of effort costs)?

Accepted Answer

$500+.20*(

Question 4

What is a benefit of the de-centralized organization coordination solution?

Accepted Answer

A) Ensures no coordination opportunities are missed 
B) Makes the organization more hierarchical 
C) Takes advantage of localized information 
D) Improves communication 
E) Always encourages collaboration 
A) Ensures no coordination opportunities are missed 
B) Makes the organization more hierarchical 
C) Takes advantage of localized information 
D) Improves communication 
E) Always encourages collaboration

Question 5

Which of the following factors is an effective tool for companies to use to mitigate hidden action and hidden information problems in agency relationships?

Accepted Answer

A) Monitoring 
B) Offshoring 
C) Coordination 
D) Objectives 
E) Confrontation 
A) Monitoring 
B) Offshoring 
C) Coordination 
D) Objectives 
E) Confrontation

What is a key factor in determining how a firm resolves coordination problems?

Which of the following is not a characteristic of performance based pay?

What is a benefit of the de-centralized organization coordination solution?

Which of the following factors is an effective tool for companies to use to mitigate hidden action and hidden information problems in agency relationships?

Basic Microeconomic Principles

Economies of Scale and Scope

The Power of Principles - an Historical Perspective

The Vertical Boundaries of the Firm

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Competitors and Competition

Strategic Commitment

The Dynamics of Pricing Rivalry

Entry and Exit

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters

Exam 3: Agency and Coordination

What is a key factor in determining how a firm resolves coordination problems?

Which of the following is not a characteristic of performance based pay?

What is a benefit of the de-centralized organization coordination solution?

Which of the following factors is an effective tool for companies to use to mitigate hidden action and hidden information problems in agency relationships?

Basic Microeconomic Principles

Economies of Scale and Scope

The Power of Principles - an Historical Perspective

The Vertical Boundaries of the Firm

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Competitors and Competition

Strategic Commitment

The Dynamics of Pricing Rivalry

Entry and Exit

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters