davids77

First, the principal is assumed to optimally choose a contract based on observable performance signals. 
第一：合約的採用一定是憑可觀察到的表現來決定。
 
Next, given the compensation contract, the agent is assumed to optimally trade-off disutility for higher effort against expected utility for higher incentive compensation resulting from improved performance.
第二：在薪酬的合約裡面，負責人一定要在鼓勵性的【表現越好，獲酬越多】跟懲罰性的【表現越差，獲酬越少】兩者之間做出平衡。
 
Two optimization assumptions are maintained in this model. 
在這個模型裡，我們一直都實踐下面兩個原則。