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Ederer, Florian; Stremitzer, Alexander - Cowles Foundation for Research in Economics, Yale University - 2013

We investigate why people keep their promises in the absence of external enforcement mechanisms and reputational effects. In a controlled laboratory experiment we show that exogenous variation of second-order expectations (promisors' expectations about promisees' expectations that the promise...

Persistent link: https://www.econbiz.de/10011252589

Gaming and Strategic Opacity in Incentive Provision

Ederer, Florian; Holden, Richard; Meyer, Margaret - Cowles Foundation for Research in Economics, Yale University - 2014

linear contracts, these opaque schemes induce more balanced efforts, but they also impose more risk on the agent per unit of …

Persistent link: https://www.econbiz.de/10010895687

The Interaction of Implicit and Explicit Contracts in Repeated Agency

Pearce, David G.; Stacchetti, Ennio - Cowles Foundation for Research in Economics, Yale University - 1988

the principal changes the nature of the problem. Such information can be used in implicit, self-enforcing contracts … between principal and agent, that supplement the usual explicit contracts. This paper studies the way in which the two kinds … of contracts are combined in constrained efficient equilibria of the agency supergame. The agent's compensation is …

Persistent link: https://www.econbiz.de/10005762612

Liquidity, Default and Crashes: Endogenous Contracts in General Equilibrium

Geanakoplos, John - Cowles Foundation for Research in Economics, Yale University - 2001

endogenous contracts, including endogenous margin requirements on loans. This in turn allows GE to explain liquidity and …

Persistent link: https://www.econbiz.de/10005593327

Liquidity, Default and Crashes: Endogenous Contracts in General Equilibrium

Geanakoplos, John - Cowles Foundation for Research in Economics, Yale University - 2001

contracts, including endogenous margin requirements on loans. This in turn allows GE to explain liquidity and liquidity crises …

Persistent link: https://www.econbiz.de/10004990661

Optimally Empty Promises and Endogenous Supervision

Miller, David A.; Rozen, Kareen - Cowles Foundation for Research in Economics, Yale University - 2011

difficult to write individual performance into formal contracts, incentives are provided informally, using wasteful sanctions … like guilt and shame, or slowed promotion. These features give rise to optimal contracts with "empty promises" and …

Persistent link: https://www.econbiz.de/10009321766

Dynamic Moral Hazard without Commitment

Horner, Johannes; Samuelson, Larry - Cowles Foundation for Research in Economics, Yale University - 2015

We study a discrete-time model of repeated moral hazard without commitment. In every period, a principal finances a project, choosing the scale of the project and a contingent payment plan for an agent, who has the opportunity to appropriate the returns of a successful project unbeknownst the...

Persistent link: https://www.econbiz.de/10011170126

Collaborating

Bonatti, Alessandro; Horner, Johannes - Cowles Foundation for Research in Economics, Yale University - 2009

This paper examines moral hazard in teams over time. Agents are collectively engaged in an uncertain project, and their individual efforts are unobserved. Free-riding leads not only to a reduction in effort, but also to procrastination. The collaboration dwindles over time, but never ceases as...

Persistent link: https://www.econbiz.de/10005000297

Moral Hazard in Home Equity Conversion

Shiller, Robert J.; Weiss, Allan N. - Cowles Foundation for Research in Economics, Yale University - 1998

Home equity conversion as presently constituted or proposed usually does not deal well with the potential problem of moral hazard. Once homeowners know that the risk of poor market performance of their homes is borne by investors, they have an incentive to neglect to take steps to maintain the...

Persistent link: https://www.econbiz.de/10005762587

Default in a General Equilibrium Model with Incomplete Markets

Dubey, Pradeep; Geanakoplos, John; Shubik, Martin - Cowles Foundation for Research in Economics, Yale University - 2000

We extend the standard model of general equilibrium with incomplete markets (GEI) to allow for default. The equilibrating variables include aggregate default levels, as well as prices of assets and commodities. Default can be either strategic, or due to ill-fortune. It can be caused by events...

Persistent link: https://www.econbiz.de/10005593164