We focus on the role that the transmission of information between a multilateral (the IMF) and a country has for the optimal design of conditional reforms. Our model predicts that when agency problems are especially severe, and/or IMF information is valuable, a centralized control is indeed...

Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide justification by sending a costly cheap-talk message. I show that the principal explains her evaluation to the agent if the evaluation turns out to be...

The marginal cost of effort often increases as effort is exerted. In a dynamic moral hazard setting, dynamically increasing costs create information asymmetry. This paper characterizes the optimal contract and helps explain the popular yet thus far puzzling use of non-linear incentives, for...

I present a model in which a principal selects one among many agents to develop a project and influences the agent's ex post level of effort not by outcome-contingent rewards, but by the choice of the project's mission. The closer the project's mission to the agent's preferred mission, the...

In many contracting settings, actions costly to one party but with no direct benefits to the other (money-burning) may be part of the explicit or implicit contract. A leading example is bureaucratic procedures in an employer-employee relationship. We study a model of delegation with an informed...

Supplementary Appendix to "Delegation and Nonmonetary Incentives."The paper "Delegation and Nonmonetary Incentives" to which these Appendices apply is available at the following URL: "http://ssrn.com/abstract=2700821" http://ssrn.com/abstract=2700821

This paper analyzes the impact of agents' risk aversion and other agency parameters on optimal bias in the performance measures used for incentive contracts. Prior research has shown that the limited liability of the agent results in a demand for accounting systems that are stringent compared to...

We consider discrete time dynamic principal--agent problems with continuous choice sets and potentially multiple agents. We prove the existence of a unique solution for the principal's value function only assuming continuity of the functions and compactness of the choice sets. We do this by a...

This paper analyzes the issue of implementing correlated and communication equilibria when pre-play communication is restricted to a particular network (e.g., a hierarchy). When communication between the mediator and the players is not direct and private, as assumed when invoking the revelation...

I develop a dynamic model of financing decisions and optimal debt maturity choice in which creditors face adverse selection and learn about the firm's quality from news. In equilibrium, shareholders may choose to postpone debt issuance to reduce adverse selection and improve the pricing of newly...