Performance Measurement in Military Operations: Information versus Incentives

Abstract

We explore the impact of strategic assessment efforts on military organizations at war. To do so, we construct a model to explore the impact of a principal’s choice among imperfect performance metrics for a military operation. In doing so, the principal must consider both the incentivizing and informational properties of the metric. We show the conditions under which uncertainty regarding the nature of the agent, as well as uncertainty regarding the operational environment, drives a metric choice that induces pathological behavior from the agent. More specifically, a poor metric choice can create an overly optimistic assessment and end up prolonging the conflict. We illustrate the model’s insights in the cases of the Second World War and the Vietnam War.