When real estate agents sell their own, rather than clients, houses, they leave the houses on the market for a longer time (10 days longer on average) and wind up with better prices (2% higher on average). Why?
Discuss the advantages and disadvantages of using divisional profit as the basis of incentive compensation for division managers compared to using company profit as the basis.
Additional References (hyperlinks):
7.15.14 Froeb Chapter 21: Getting Employees to Work In the Firm’s Best Interest (Draft 1) – YouTube
Managerial Econ: Physician Induced Demand
peter gibbons interview – YouTube
7.25.14 Froeb Chapter 22: Getting Divisions to Work in the Best Interests of the Firm (Draft 1) – YouTube
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