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Fairness, Incentives and Contractual Incompleteness

Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - C.E.P.R. Discussion Papers - 2001

We show that concerns for fairness may have dramatic consequences for the optimal provision of incentives in a moral hazard context. Incentive contracts that are optimal when there are only selfish actors become inferior when some agents are concerned with fairness. Conversely, contracts that...

Persistent link: https://www.econbiz.de/10005792499

Rotten Kids with Bad Intentions

Netzer, Nick; Schmutzler, Armin - C.E.P.R. Discussion Papers - 2010

player has higher material payoffs, so that reciprocity does not increase equity: For sufficiently strong reciprocity …

Persistent link: https://www.econbiz.de/10008468559

An Empirical Investigation of Gaming Responses to Explicit Performance Incentives

Courty, Pascal; Marschke, Gerald - C.E.P.R. Discussion Papers - 2002

This Paper studies a particular kind of gaming response to explicit incentives in a large government organization. The gaming responses we consider occur when agents strategically report their performance outcomes to maximize their awards. An important contribution of this work is to examine...

Persistent link: https://www.econbiz.de/10005662347

Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions

Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2005

This paper discusses the optimal organization of sequential agency problems with contractible control actions under limited liability. In each of two stages, a risk-neutral agent can choose an unobservable effort level. A success in the first stage makes effort in the second stage more...

Persistent link: https://www.econbiz.de/10005791951

What You Sell is What You Lend? Explaining Trade Credit Contracts

Burkart, Mike; Ellingsen, Tore; Giannetti, Mariassunta - C.E.P.R. Discussion Papers - 2004

insight to analyse the trade credit volume and the contract terms. Our analysis suggests that the most important product … characteristic for explaining trade credit volume and contract terms is the ease with which the seller’s product can be diverted …

Persistent link: https://www.econbiz.de/10005656434

Debt Contracts, Collapse and Regulation as Competition Phenomena

Gersbach, Hans; Uhlig, Harald - C.E.P.R. Discussion Papers - 1997

lenders, which may make lending altogether unprofitable. Second, banks can have an incentive to offer a debt contract and … additional equity contracts to intermediate debtors, which is in turn dominated by a simple debt contract, only attractive for … seek to avoid the contract with the highest chance of delivery: that contract attracts all bad entrepreneurs. …

Persistent link: https://www.econbiz.de/10005661861

Sovereign Debt and Structural Reforms

Müller, Andreas; Storesletten, Kjetil; Zilibotti, Fabrizio - C.E.P.R. Discussion Papers - 2015

Motivated the European debt crisis, we construct a tractable theory of sovereign debt and structural reforms under limited commitment. The government of a sovereign country which has fallen into a recession of an uncertain duration issues one-period debt and can renege on its obligations by...

Persistent link: https://www.econbiz.de/10011276380

Bank Solvency, Market Structure, and Monitoring Incentives

Caminal, Ramon; Matutes, Carmen - C.E.P.R. Discussion Papers - 1997

We analyse the impact of market structure on the probability of banking failure when banks’ loan portfolios are subject to aggregate uncertainty. In our model borrowers are subject to a moral hazard problem, which induces banks to choose between two second-best alternative devices: costly...

Persistent link: https://www.econbiz.de/10005662062

Tax Policy, Venture Capital and Entrepreneurship

Keuschnigg, Christian; Nielsen, Soren Bo - C.E.P.R. Discussion Papers - 2000

The Paper studies the effects of tax policy on venture capital activity. Entrepreneurs pursue a single high-risk project each but have no own resources. Financiers provide equity finance. They must structure the entrepreneur’s profit share and base salary to assure their incentives for full...

Persistent link: https://www.econbiz.de/10005666436

Credit Booms and Lending Standards: Evidence From The Subprime Mortgage Market

DellAriccia, Giovanni; Igan, Deniz; Laeven, Luc - C.E.P.R. Discussion Papers - 2008

This paper studies the relationship between the recent boom and current delinquencies in the subprime mortgage market. Specifically, we analyze the extent to which this relationship can be explained by a decrease in lending standards that is unrelated to improvements in underlying economic...

Persistent link: https://www.econbiz.de/10005666586

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