A optimal theoretical contract for an employer is: - If good outcome, pay a huge amount of money. - If bad outcome, pay 0 (or even negative, by getting money

A optimal theoretical contract for an employer is: - If good outcome, pay a huge amount of money. - If bad outcome, pay 0 (or even negative, by getting money from the employee). This will incentivize workers for good outcomes. Of course this is unfeasible and difficult to measure, but bonuses make contracts closer to this theoretical contract.