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Contracting under Incomplete Information and Social Preferences: An Experimental Study
Hoppe, Eva I; Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2013
cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights … are reflected by the behavior of subjects in the laboratory and to what extent deviations from standard theory can be … agency theory is indeed useful to qualitatively predict how variations in the degree of uncertainty affect subjects' behavior …
Persistent link: https://www.econbiz.de/10011084433
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Gathering Information before Signing a Contract: Experimental Evidence
Hoppe, Eva I; Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2009
A central insight of agency theory is that when a principal offers a contract to a privately informed agent, the … particular, we investigate settings with both exogenous and endogenous information structures. We find that theory is indeed a …
Persistent link: https://www.econbiz.de/10005789080
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Vertical Exclusion with Endogenous Competiton Externalities
Hansen, Stephen; Motta, Massimo - C.E.P.R. Discussion Papers - 2012
consumers, an upstream firm posts public bilateral contracts. When downstream firms are risk-neutral without wealth constraints …, the upstream firm offers the input to all retailers. When they are sufficiently risk averse it sells to one, thereby … eliminating externalities among downstream firms that necessitate the payment of risk premia. By similar reasoning exclusion is …
Persistent link: https://www.econbiz.de/10011083463
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Can Market Failure Cause Political Failure
Aney, Madhav; Ghatak, Maitreesh; Morelli, Massimo - C.E.P.R. Discussion Papers - 2011
We study how inefficiencies of market failure may be further amplified by political choices made by interest groups created in the inefficient market. We take an occupational choice framework, where agents are endowed heterogeneously with wealth and talent. In our model, market failure due to...
Persistent link: https://www.econbiz.de/10009246601
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A Large-Market Rational Expectations Equilibrium Model
Vives, Xavier - C.E.P.R. Discussion Papers - 2011
This paper presents a market with asymmetric information where a privately revealing equilibrium obtains in a competitive framework and where incentives to acquire information are preserved. The equilibrium is efficient, and the paradoxes associated with fully revealing rational expectations...
Persistent link: https://www.econbiz.de/10009644035
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Asset Auctions, Information, and Liquidity
Vives, Xavier - C.E.P.R. Discussion Papers - 2010
A model is presented of a uniform price auction where bidders compete in demand schedules; the model allows for common and private values in the absence of exogenous noise. It is shown how private information yields more market power than the levels seen with full information. Results obtained...
Persistent link: https://www.econbiz.de/10008468554
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Optimal Interventions in Markets with Adverse Selection
Philippon, Thomas; Skreta, Vasiliki - C.E.P.R. Discussion Papers - 2010
We study interventions to restore efficient lending and investment when financial markets fail because of adverse selection. We solve a design problem where the decision to participate in a program offered by the government can be a signal for private information. We charac terize optimal...
Persistent link: https://www.econbiz.de/10008468692
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Performance Indicators for Quality with Adverse Selection, Gaming and Inequality Aversion
Kuhn, Michael; Siciliani, Luigi - C.E.P.R. Discussion Papers - 2007
Performance indicators are increasingly used to regulate quality in health care and other areas of the public sector. We develop a model of contracting between a purchaser (principal) and a provider (agent) under the following scenarios: a) higher ability increases quality directly and...
Persistent link: https://www.econbiz.de/10005123654
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A Tale of Two Platforms: Dealer Intermediation in the European Sovereign Bond Market
Dunne, Peter; Hau, Harald; Moore, Michael - C.E.P.R. Discussion Papers - 2008
Interdealer trading in the European sovereign bond market is characterized by low spreads and high liquidity. This paper examines whether the dealer-customer segment of the market also benefits from low spreads. Customers are smaller banks and buy-side financial institutions who request quotes...
Persistent link: https://www.econbiz.de/10005123656
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Hiring And Firing Costs, Adverse Selection And The Persistence Of Unemployment
Kugler, Adriana D.; Saint-Paul, Gilles - C.E.P.R. Discussion Papers - 2000
In this paper, we present a matching model with adverse selection that explains why flows into and out of unemployment are much lower in Europe compared to North America, while employment-to-employment flows are similar in the two continents. In the model, firms use discretion in terms of whom...
Persistent link: https://www.econbiz.de/10005124276