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Renegotiation of Sales Contracts
Matthews, Steven A. - 1993
Contracts adopted with later renegotiation in mind may take simple forms. In a principal-agent model, if renegotiation may occur after the agent chooses efforet, the principal protects against unfavorable renegotiation by "selling the project" to the agent via a sales contract. If only singleton...
Persistent link: https://www.econbiz.de/10012235864
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Dynamic managerial compensation: On the optimality of seniority-based schemes
Garrett, Daniel; Pavan, Alessandro - 2010
, the power of incentives (i.e., the sensitivity of pay to performance) typically increases over time, thus providing a …-based compensation schemes whose power of incentives increases over time. …
Persistent link: https://www.econbiz.de/10010282906
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Sweet Lemons: Mitigating Collusion in Organizations
Pollrich, Martin; von Negenborn, Colin - 2018
This paper shows that the possibility of collusion between an agent and a supervisor imposes no restrictions on the set of implementable social choice functions (SCF) and associated payoff vectors. Any SCF and any payoff profile that are implementable if the supervisor′s information was public...
Persistent link: https://www.econbiz.de/10011932965
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Investment and Risk-taking in Procurement and Regulation
Hubert, Franz - Universität <Berlin, Humboldt-Universität> / Chair … - 1999
This note analyses investment and risk-taking in a simple agency model of public regulation/procurement borrowed from Laffont & Tirole (1993). We show that the principal will overinvest or underinvest depending on whether investment is marginally more productive in bad or in good states. Due to...
Persistent link: https://www.econbiz.de/10005841021
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Dynamic managerial compensation: On the optimality of seniority-based schemes
Garrett, Daniel; Pavan, Alessandro - 2014
We study the optimal dynamics of incentives for a manager whose ability to generate cash .ows changes stochastically … with time and is his private information. We show that, in general, the power of incentives (or "pay for performance") may … power of incentives later in the relationship. Our results follow from a new variational approach that permits us to tackle …
Persistent link: https://www.econbiz.de/10011335456
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A Theory of Crowdfunding: A Mechanism Design Approach with Demand Uncertainty and Moral Hazard
Strausz, Roland - 2017
Crowdfunding provides innovation in enabling entrepreneurs to contract with consumers before investment. Under aggregate demand uncertainty, this improves screening for valuable projects. Entrepreneurial moral hazard and private cost information threatens this benefit. Crowdfunding's...
Persistent link: https://www.econbiz.de/10011592122
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Optimal procurement of a credence good under limited liability
Bester, Helmut; Yaofu, Ouyang - 2018
This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer's need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable, and...
Persistent link: https://www.econbiz.de/10011782152
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Managerial turnover in a changing world
Garrett, Daniel; Pavan, Alessandro - 2010
We characterize a firm's profit-maximizing turnover policy in an environment where managerial productivity changes stochastically over time and is the managers' private information. Our key positive result shows that the productivity level that the firm requires for retention declines with the...
Persistent link: https://www.econbiz.de/10010282881
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Cross-subsidization and matching design
Gomes, Renato; Pavan, Alessandro - 2013
We develop a theory of price discrimination in many-to-many matching markets in which agents' preferences are vertically and horizontally differentiated. The optimal plans induce negative assortative matching at the margin: agents with a low value for interacting with other agents are included...
Persistent link: https://www.econbiz.de/10010352853
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Stock options and chief executive officer compensation
Armstrong, Christopher S.; Larcker, David F.; Su, Che-Lin - 2007
Although stock options are commonly observed in chief executive o±cer (CEO) compensation contracts, there is theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we solve an agency model calibrated to the company-specific...
Persistent link: https://www.econbiz.de/10010266313