Which incentive scheme would simultaneously elicit accurate informatio

Which incentive scheme would simultaneously elicit accurate information about feasible plant production levels and motivate managers to perform up to potential (in the following schemes, B is the bonus payment, Q is actual plant output, and Qf is the

manager’s estimate of feasible output)? A) B = 0.4Q
B) B = 0.4(Q – Qf)
C) B = 0.4Qf + 0.3(Q – Qf) if Q > Qf
D) B = 0.4Qf – 0.6(Q – Qf) if Q < Qf E) B = 0.4Qf - 0.6(Q - Qf) if Q > Qf

ANSWER

C