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Common agency equilibria with discrete mechanisms and discrete types

Martimort, David; Stole, Lars A. - 2001

This paper characterizes the equilibrium sets of an intrinsic common agencygame with discrete types and direct revelation mechanisms. After presentinga general algorithm to find the pure-strategy equilibria of this game, we use itto characterize these equilibria when the two principals control...

Persistent link: https://www.econbiz.de/10011400396

Contractual externalities and common agency equilibria

Martimort, David; Stole, Lars A. - 2001

This paper characterizes the equilibrium sets of an intrinsic common agency game with direct exter-nalities between principals both under complete and asymmetric information. Direct externalities arise when the contracting variable of one principal affects directly the other principal s payoff....

Persistent link: https://www.econbiz.de/10011400799

Relational incentive contracts with persistent private information

Malcomson, James M. - 2015 - This version: July 24, 2015

This paper investigates relational incentive contracts with continuous, privately-observed agent types that are persistent over time. With fixed agent types, full separation is not possible when continuation equilibrium payoffs following revelation are on the Pareto frontier of attainable...

Persistent link: https://www.econbiz.de/10011300994

Learning from failures : optimal contract for experimentation and production

Khalil, Fahad; Lawarrée, Jacques; Rodivilov, Alexander - 2018

Before embarking on a project, a principal must often rely on an agent to learn about its profitability. We model this learning as a two-armed bandit problem and highlight the interaction between learning (experimentation) and production. We derive the optimal contract for both experimentation...

Persistent link: https://www.econbiz.de/10011926023

Relational contracts with private information on the future value of the relationship : the upside of implicit downsizing costs

Fahn, Matthias; Klein, Nicolas Alexandre - 2017

We analyze a relational contracting problem, in which the principal has private information about the future value of the relationship. In order to reduce bonus payments, the principal is tempted to claim that the value of the future relationship is lower than it actually is. To induce...

Persistent link: https://www.econbiz.de/10011700481

Optimal contracting with endogenous project mission

Cassar, Lea - 2016

I analyze a model in which a principal offers a contract to an agent and can influence the agent’s marginal return of effort by the choice of the project mission. The principal's and the agents' mission preferences are misaligned, and the agents have unobservable intrinsic motivation levels. I...

Persistent link: https://www.econbiz.de/10011561184

Do managers with limited liability take more risky decisions? : an information acquisition model

Malcomson, James M. - 2010

Risk-neutral individuals take more risky decisions when they have limited liability. Risk-neutral managers may not when … acting as agents under contract and taking costly actions to acquire information before taking decisions. Limited liability … return. Further results on the form of contracts are also derived. -- managers ; risky decisions ; limited liability …

Persistent link: https://www.econbiz.de/10003937594

On the optimal use of correlated information in contractual design under limited liability

Danau, Daniel; Vinella, Annalisa - 2018

when the agent is protected by limited liability. In this paper, we investigate how the principal should construct the … globally incentive compatible under limited liability, if local incentive constraints are strictly satisfied. We identify …

Persistent link: https://www.econbiz.de/10011822030

Contracts and Inequity aversion

Englmaier, Florian; Wambach, Achim - 2002

Using the concept of Inequity Aversion we derive in a Moral Hazard setting several results which differ from conventional contract theory. Our three key insights are: First, inequity aversion plays a crucial role in the design of optimal contracts. Second, there is a strong tendency towards...

Persistent link: https://www.econbiz.de/10011514018

CEO compensation : evidence from the field

Edmans, Alex; Gosling, Tom; Jenter, Dirk - 2021

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

Persistent link: https://www.econbiz.de/10012584217