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Dynamic Incentive Contracts Under Parameter Uncertainty
Prat, Julien - 2010
We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed...
Persistent link: https://www.econbiz.de/10013135822
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Dynamic Contracts and Learning by Doing
Prat, Julien - 2014
This paper studies the design of optimal contracts in dynamic environments where agents learn by doing. We derive a condition under which contracts are fully incentive compatible. A closed-form solution is obtained when agents have CARA utility. It shows that human capital accumulation...
Persistent link: https://www.econbiz.de/10013058309
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Optimal Incentive Contracts Under Moral Hazard When the Agent is Free to Leave
Englmaier, Florian - 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/10013141421
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Hidden Insurance in a Moral Hazard Economy
Bertola, Giuseppe - 2013
We consider an economy where individuals privately choose effort and trade competitively priced securities that pay off with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then standard functional form restrictions ensure that...
Persistent link: https://www.econbiz.de/10013071425
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Search and Retirement Under Asymmetric Information
Bi, Sheng - 2014
We consider a labor market where the competitive search equilibrium is inefficient due to asymmetrical information. At the time when firms commit to specific hiring costs, workers hold private information on their intention of entering into retirement before the termination of the contract. When...
Persistent link: https://www.econbiz.de/10013051435
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Task Difficulty, Performance Measure Characteristics, and the Trade-Off between Insurance and Well-Allocated Effort
Schnedler, Wendelin - 2021
When designing incentives for a manager, the trade-off between insurance and a "good" allocation of effort across various tasks is often identified with a trade-off between the responsiveness (sensitivity, precision, signal-noise ratio) of the performance measure and its similarity (congruity,...
Persistent link: https://www.econbiz.de/10013317592
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Competition and the Ratchet Effect
Charness, Gary; Kuhn, Peter; Villeval, Marie Claire - 2021
The 'ratchet effect' refers to a situation where a principal uses private information that is revealed by an agent's early actions to the agent's later disadvantage, in a context where binding multi-period contracts are not enforceable. In a simple, context-rich environment, we experimentally...
Persistent link: https://www.econbiz.de/10013324885
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Corporate Efficiency, Credit Status and Investment
Quader, Manzur - 2014
's constrained credit status changes with the improvement of its efficiency. The results further reveal that financially constrained … firm's investment is comparatively more sensitive to cash flow, but this sensitivity is negatively and significantly … related with corporate efficiency. These results point to the fact that high investment sensitivity to cash flow may not be …
Persistent link: https://www.econbiz.de/10013051438
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How Do Informal Agreements and Renegotiation Shape Contractual Reference Points?
Fehr, Ernst - 2011
Previous experimental work provides encouraging support for some of the central assumptions underlying Hart and Moore (2008)'s theory of contractual reference points. However, existing studies ignore realistic aspects of trading relationships such as informal agreements and ex post...
Persistent link: https://www.econbiz.de/10013118520
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The Response to Dynamic Incentives in Insurance Contracts with a Deductible : Evidence from a Differences-in-Regression-Discontinuities Design
Klein, Tobias J. - 2020
We develop a new approach to quantify how patients respond to dynamic incentives in health insurance contracts with a deductible. Our approach exploits two sources of variation in a differences-in-regression-discontinuities design: deductible contracts reset at the beginning of the year, and...
Persistent link: https://www.econbiz.de/10012837905