ECON5323 Organisational Economics Teamwork questions 1 1. Consider a principal-agent scenario in which the instructor is the principal and the students are agents. Suppose the principal is interested in maximising a measure called “learning”, which is costly for the students. Further suppose that the instructor is “mean”, i.e. he doesn’t like to give out marks. (a) Suppose “learning” is not observable, but is perfectly measurable by a variable that is observable: “class attendance”. What can the instructor do to incentivise learning? (b) Realistically, “learning” is not observable, but “class attendance” (while being observable) isn’t a very good measure of “learning”. Name one behavior that 1) is rewarded by incentivising attendance and 2) the principal does not care about. (c) Name one behavior that contributes to “learning” that is not “captured” by a performance measure linked to attendance. (d) We assumed that giving out marks is somehow “costly” for the instructor. Explain how the analysis in a-c changes if it is not. 2. Put yourself in the shoes of an instructor (the principal) who assigns a group essay. The principal cares about maximising 1) how well-written the final submissions are 2) to what extent the essay is written “as a team” and he cares about minimising time spent marking. Discuss the pros and cons of two of the following marking schemes in meeting the principal’s three objectives. Also, suggest another marking scheme not listed here, and evaluate it based on the same criteria. (a) Each student gets a mark corresponding to the worst part of the essay. (b) Each student gets a mark corresponding to the best part of the essay. (c) Each student indicates to the instructor which part they wrote, and gets an individual mark based on the quality of that part. (d) To determine the mark of each student, the instructor randomly chooses a passage from the essay and gives the student a mark corresponding to the quality of that part. 1 51作业君版权所有