Performance Incentives and Planning under Uncertainty.
AIR FORCE ACADEMY COLO
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The report discusses the use of the performance incentive function PIF by planning organizations when there is subjective or objective uncertainty. It is proved that a PIF can be constructed which achieves both allocational and distributional optimality, when there is subjective uncertainty about the conditions of production and both the center and the producer are risk averse. When there is objective uncertainty, however, it is shown that it is not, in general, possible for the center to achieve these two objectives simultaneously.
- Economics and Cost Analysis
- Operations Research