Hence, more weight is likely to be placed on the manager's opinion than when information is reported honestly, so that for example the manager has more input over whether a project is undertaken or not. Nada allam This allows me to concentrate on the desire for conformity. Therefore, the existence of yes men where the worker conforms (i.e., where u: *University of Chicago, Graduate School of Business, 1101 E. 58th St., Chicago, IL 60637. To illustrate the worker's incentives, first fix the effort level of the manager. Then the profits of the manager depend on the variance of q because for any q*, as Var(7j) rises (where 7j is the estimate of q), the project is incorrectly undertaken (and eschewed) more often.' As humans, we all have a comfort zone, a place where we feel safe, can anticipate the unknown and just feel our happiest. -V* -Cm(eg)- C,(e;) when a; =m; but Then, as profits vary monotonically and continuously in a:, there exists a unique uf* > 0 such that the profits from offering an incentive contract exactly equal those from not doing so. Hence, I assume that workers have information on the man- ager's opinion, but that observation is un- known to the manager. genuinely nice and the people are truly sharing fastidious thoughts. I am sure all of you saw the famous 'Yes Man' movie back in 2008. He’s built the habit of saying no. Holmstrom, Bengt, "Moral Hazard and Ob- servability," Bell Journal of Economics, Spring 1979, 10, 74-91. Then the worker's report depends on two variables which are unknown to the manager, q, and q,, but only q, is relevant for determining the true value of q (as qm is a sufficient statistic for q,). By offering wages that are independent of perceived actions, workers shirk as in a standard prin- cipal-agency model, but at least it gives them an incentive to report their informa- tion honestly. Khoa Bui is a best selling author, international speaker, YouTuber and the founder of YouBeRelentless. When the worker is risk-neutral and faces no liquidity constraints, it is well known that the manager induces the level of effort by the worker which minimizes Var(+) + C,(e,) + C,(e,) in equilibrium. I mean wouldn't saying yes to everything lead to a lot of overbooking? Carl smiles and realises that the word “Yes” always leads to something good. Beyond simply illustrating the possible in- centive for subordinates to conform to their superiors' opinions, this paper illustrates in- efficiencies associated with yes men. D. Comparative Statics The model has been chosen to be simple to provide comparative-static results in or- der to provide predictions on when the inci- dence and costs of conformity are likely to be high. -, "Moral Hazard in Teams," Bell Journal of Economics, Autumn 1982, 13, 324-40. and Milgrom, Paul R., "Multitask Principal-Agent Analyses: Incentive Con- tracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organiza- tion, August 1991, 7, 24-52. He travels, explores different opportunities, helps a suicide victim, learns Korean and more. Second, perhaps the most common example of interaction between employees within organizations oc- curs when workers seek the opinions of others. You can reach her on nada@fustany.com or on Twitter @Nallam46. As the variance on the common prior falls, both the precision of the worker's estimate and the A estimate get better, but the speed of variance reduc- tion is higher for the A estimate, so that yes men are more likely (in the sense of [p2/1.~o]2u,2 getting larger) as a; gets smaller. Instead, it is the reduced value of the worker's infor- mation that causes the result, since the worker's information is contaminated with noise. Tags. The errors are uncorrelated. So are you going to try the 'Yes Man' theory? First, q could refer to the profitability of a potential project which is only undertaken if its true value exceeds some critical level q*. Notwithstanding this, I now show that if a; is small enough, the firm's profits are higher with no incentive contract. To date, the duo have produced three films: The Yes Men (2003), The Yes Men Fix the World (2009), and The Yes Men Are Revolting (2014). The audience applauds and you can tell there’s high energy coming from the crowd and following of this particular speaker. This implies a first- order condition. He is also the founder of Dauntless Development, a digital marketing company that helps businesses get more exposure and generate more leads online. As above, incentives can only be provided by relative performance evaluation. Hence the value of additional infor- mation may be limited. Milgrom, Paul R. and Roberts, D. John, "An Economic Approach to Influence Activi- ties and Organizational Responses," American Journal of Sociology, July 1988, 94 (Supplement), S154-79. Introducing this effect implies that the manager must design incen- tives to induce the worker not to exert effort on these unproductive a~tivities.~, I assume that the worker and the man- ager are risk-neutral. Hence subjective performance evaluation requires that the worker benefits from guessing the opinion of the manager. In order to determine the first best, as- sume that the worker truthfully reports his observation. However, as the manager can only invert the worker's report to determine z = qw+[p2 /pO]qA, the estimate of the variance of rj is given by,