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derive the optimal contract for both experimentation and production when the agent has private information about his … asymmetric information is endogenously determined by the length of the experimentation stage. An optimal contract uses the length …
Persistent link: https://www.econbiz.de/10012892041
, competition does not eliminate but rather exacerbates inefficiencies arising from contracting with focused agents. Common contract …
Persistent link: https://www.econbiz.de/10012890631
performance measures. We show that such an index contract may indeed be optimal if performance measures are non-verifiable so that … measurements), the optimal self-enforcing (relational) contract between a principal and a multitasking agent is an index contract …. The weights reflect a trade-off between distortion and precision for the measures. The efficiency of the contract improves …
Persistent link: https://www.econbiz.de/10013243235
Subjective evaluations are widely used, but call for different contracts from traditional moral-hazard settings. Previous literature shows that contracts require payments to third parties, which real-world contracts rarely use. I show that the implicit assumption of deterministic contracts makes...
Persistent link: https://www.econbiz.de/10013311715
updates beliefs using Bayes’ rule. An exploitation contract in which the agent is only compensated for his effort if the extra … profit materializes maximizes the principal’s profits. In this optimal contract, the agent's principal-expected compensation …
Persistent link: https://www.econbiz.de/10014347990
contracts that facilitate both coordination and adaptation - enable organizations to achieve these ends. In a novel experiment … adapt to exogenous shocks. Specifically, we test the hypothesis that basing a relational contract on general principles … actions that are consistent with what their relational contract prescribes. To investigate whether there is a causal link …
Persistent link: https://www.econbiz.de/10012847369
Trust between parties should drive the negotiation and design of contract: if parties did not trust each others … over time, we find that lower trust increases contract completeness. Not only contract complexity but also the verifiable …
Persistent link: https://www.econbiz.de/10013314897
Consider a contract over trade in continuous time between two players, according to which one player makes a payment to … adjustment of the contract payment, involving adjustment costs for both players. Players? payoffs from trade under the contract …, as well as from trade under an adjusted contract, are exogenous and stochastic. We consider players? choice of whether …
Persistent link: https://www.econbiz.de/10010261197
We study the problem of multiple principals who want to obtain income from a privately informed agent and design their contracts non-cooperatively. Our analysis reveals that the degree of coordination between principals has strong implications for the shapes of contracts and the amount of...
Persistent link: https://www.econbiz.de/10010261310
We test the no-trade theorem in a laboratory financial market where subjects can trade an asset whose value is unknown. Subjects receive clues on the asset value and then set a bid and an ask at which they are willing to buy or to sell from the other participants. In treatments with no gains...
Persistent link: https://www.econbiz.de/10010264465