K.U.Leuven - Departement toegepaste economische wetenschappen
DTEW Research Report 9512 pages:1-24
he controllability principle says that an individual should be rewarded on the basis of what he controls. This paper studies this principle from a principal agent point of view. A dynamic multiple agent model is constructed and the controllability principle is compared with the agency model's solution. It is shown that from a principal agent's point of view all results that give information about an individual's action should be used to determine his remuneration.