Similar Search Results

Optimal Incentive Contracts under Moral Hazard When the Agent Is Free to Leave

Englmaier, Florian; Muehlheusser, Gerd; Roider, Andreas - Institute for the Study of Labor (IZA) - 2010

We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free to leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal...

Persistent link: https://www.econbiz.de/10008557227

Hidden Action, Identification, and Organization Design

Schnedler, Wendelin - Institute for the Study of Labor (IZA) - 2010

Incentives often fail in inducing economic agents to engage in a desirable activity; implementability is restricted. What restricts implementability? When does re-organization help to overcome this restriction? This paper shows that any restriction of implementability is caused by an...

Persistent link: https://www.econbiz.de/10008727777

Producer Protection Legislation and Termination Damages in the Presence of Contracting Frictions

Wu, Steven Y. - Institute for the Study of Labor (IZA) - 2009

This study models producer protection legislation that would grant growers the right to claim damages (PPLD) if their contracts are prematurely terminated. In the absence of contracting frictions that prevent contractors from redesigning contracts to accommodate exogenous policy changes, PPLD...

Persistent link: https://www.econbiz.de/10005103260

Authority and Incentives in Organizations

Kräkel, Matthias - Institute for the Study of Labor (IZA) - 2013

The paper analyzes how the choice of organizational structure leads to the best compromise between controlling behavior based on authority rights and minimizing costs for implementing high efforts. Concentrated delegation and hierarchical delegation turn out to be never an optimal compromise. If...

Persistent link: https://www.econbiz.de/10010632999

Bonus Culture: Competitive Pay, Screening, and Multitasking

Benabou, Roland; Tirole, Jean - Institute for the Study of Labor (IZA) - 2013

away from less easily contractible tasks such as long-term investments, risk management and within-firm cooperation. Under …

Persistent link: https://www.econbiz.de/10010635587

Risk, Delegation, and Project Scope

Roider, Andreas - Institute for the Study of Labor (IZA) - 2007

exogenous risk and delegation. That is, we show that only if exogenous risk is sufficiently large, the risk-neutral principal … may prefer to delegate authority over decisions to the risk-averse agent. Intuitively, for incentive reasons, the … principal may optimally want to allow the agent to reduce his risk exposure. Nevertheless, even endogenous risk may be higher …

Persistent link: https://www.econbiz.de/10005703275

Negative Externalities and Equilibrium Existence in Competitive Markets with Adverse Selection

von Siemens, Ferdinand; Kosfeld, Michael - Institute for the Study of Labor (IZA) - 2009

Rothschild and Stiglitz (1976) show that there need not exist a competitive equilibrium in markets with adverse selection. Building on their framework we demonstrate that externalities between agents − an agent's utility upon accepting a contract depends on the average type attracted by the...

Persistent link: https://www.econbiz.de/10004976877

Strategic Incomplete Contracts: Theory and Experiments

Erkal, Nisvan; Wu, Steven Y.; Roe, Brian E. - Institute for the Study of Labor (IZA) - 2014

We develop a model of strategic contractual incompleteness that identifies conditions under which principals might omit even costlessly verifiable terms. We then use experiments to test comparative statics predictions of the model. While it is well known that verifiability imperfections can...

Persistent link: https://www.econbiz.de/10011105069

The Role of Bounded Rationality and Imperfect Information in Subgame Perfect Implementation: An Empirical Investigation

Aghion, Philippe; Fehr, Ernst; Holden, Richard; … - Institute for the Study of Labor (IZA) - 2015

mechanism should – in theory – provide incentives for truth-telling, many buyers in fact believe that they can increase their …

Persistent link: https://www.econbiz.de/10011265296

Handing Out Guns at a Knife Fight: Behavioral Limitations of Subgame-Perfect Implementation

Fehr, Ernst; Powell, Michael; Wilkening, Tom - Institute for the Study of Labor (IZA) - 2014

The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms – which are based on off-equilibrium arbitration clauses that...

Persistent link: https://www.econbiz.de/10010891173