Optimal distribution of manager ability in incentive system based on dynamic game of incomplete information

In China at present, an effective external manager market to distinguish information of manager ability is still a lacking. Based on this failure, this study constructs models of principalpsilas agent choosing, and discusses feasibility of solving problem of matching manager ability to position required ability through firmpsilas internal incentive system. Optimal design of incentive system may make up manager ability difference information missing in external system. Two modes of manager ability distribution are discussed. One is random arranging mode; and the other is ability matching mode. Comparison between the two modes shows that the ability matching mode is a Pareto improvement of the random arranging mode. Degree of improvement increases with decrease of effectiveness of external information identifying system.