The budget system is one of the important tools in the management accounting control system. However, in the budget goal setting process, budgeting managers may insert slack into their budgets. Budget slack will erode the effectiveness of the budget system. Agency researchers recognize that well-designed contracts can be used to solve this incentive problem. Therefore, truth-inducing schemes are widely discussed and analyzed. However, many empirical studies report that such schemes can decrease, but not eliminate slack completely. In the meanwhile, they can not increase performance. This study points out that the parameters of the schemes are not well-designed, therefore, the effectiveness to induce subordinates to disclose private information and increase performance is of failure. This paper analyses the relationship among parameters of the truth-inducing pay scheme, risk preference and budget slack by Minimax law under uncertainty, and points that this scheme will lose its effectiveness under some condition. At the meanwhile, this thesis also explains how to design a compensation contract to provide a reference for practical application.