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Optimal incentive contracts for a worker who envies his boss : presented at CESifo Venice Summer Institute, Workshop on Dissecting Globalization, July 2004

Dur, Robert A. J.; Glazer, Amihai - 2004

A worker's utility may increase in his own income, but envy can make his utility decline with his employer's income … various assumptions about the object and generality of envy. Envy amplifies the effect of incentives on effort and, therefore …, increases optimal incentive pay. Moreover, envy can make profitsharing optimal, even when the worker's effort is fully …

Persistent link: https://www.econbiz.de/10011450877

Combining "real effort" with induced effort costs : the ball-catching task

Gächter, Simon; Huang, Lingbo; Sefton, Martin - 2015

We introduce the "ball-catching task", a novel computerized real effort task, which combines "real" efforts with induced material cost of effort. The central feature of the ball-catching task is that it allows researchers to manipulate the cost of effort function as well as the production...

Persistent link: https://www.econbiz.de/10010518803

Fairness, incentives and contractual incompleteness

Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - 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 about fairness. Conversely, contracts that...

Persistent link: https://www.econbiz.de/10011398105

The principal-agent matching market

Dam, Kaniska - 2003

We propose a model based on competitive markets in order to analyse an economy with several principals and agents. We model the principal-agent economy as a two-sided matching game and characterise the set of stable outcomes of this principal-agent matching market. A simple mechanism to...

Persistent link: https://www.econbiz.de/10011507906

Scholarships or student loans? : subsidizing higher education in the presence of moral hazard

Cigno, Alessandro; Luporini, Annalisa - 2003

Student loans, even income-contingent ones, are not optimal. Potential university students with the appropriate characteristics should be offered a scholarship, dependent on both need and merit. The award of the scholarship should be conditional on the choice of university degree, but students...

Persistent link: https://www.econbiz.de/10011508011

Disentangling managerial incentives from a dynamic perspective : the role of stock grants

Hili, Amal; Laussel, Didier; Long, Ngo Van - 2016

We analyze the optimal contract between a risk-averse manager and the initial shareholders in a two-period model where the manager's investment effort, carried out in period 1, and her current effort, carried out in period 2, both impact the second-period profit, so that it may be difficult to...

Persistent link: https://www.econbiz.de/10011538964

Moral hazard and bargaining over incentive contracts

Dittrich, Marcus; Städter, Silvio - 2014

This paper analyses bargaining over an incentive compatible contract in a moral hazard framework. We introduce the Kalai-Smorodinsky bargaining solution and compare the outcome with the commonly applied Nash solution. Whether worker's effort is higher in the Nash or the Kalai-Smorodinsky...

Persistent link: https://www.econbiz.de/10010388771

Overwhelmed by routine tasks : a multi-tasking principal agent perspective

Demougin, Dominique; Helm, Carsten - 2022

We analyze a multitasking model with a verifiable routine task and a skill-dependent activity characterized by moral hazard. Contracts negotiated by firm/employee pairs follow from Nash bargaining. High- and low-skilled employees specialize, intermediate productivity employees perform both...

Persistent link: https://www.econbiz.de/10013201713

Mechanism design with moral hazard

Kwon, Suehyun - 2017

This paper studies dynamic mechanism design in the presence of moral hazard. Revelation principle extends to models with moral hazard for both full commitment and limited commitment, but I also identify environments in which the principal doesn't benefit from eliciting agents' private...

Persistent link: https://www.econbiz.de/10011717264

Adverse selection and moral hazard with multidimensional types

Kwon, Suehyun - 2017 - First draft: March 1, 2017

This paper studies a contracting problem where agents' cost of actions is private information. With two actions, this leads to a two-dimensional screening problem with moral hazard. There is a natural one-dimensional ordering of types when there is both adverse selection and moral hazard....

Persistent link: https://www.econbiz.de/10011718471