We introduce a general Principal-Agent model with subjective evaluation and malfeasance characterized by two …-sided asymmetric information on performance that allows for an arbitrary information structure. Two generic contract forms are studied …. An authority contract has the Principal reveal his information before the Agent responds with her information. Under such …

the optimal contract and analyze how it changes with informativeness. We consider a standard agency model with risk …-neutrality and limited liability, where the optimal contract is a call option. The direct effect of reducing signal volatility is a …

This paper identifies a class of multiperiod agency problems in which the optimal contract is tractable (attainable in … closed form). By modeling the noise before the action in each period, we force the contract to provide sufficient incentives … utility, a pecuniary cost of effort, Gaussian noise or continuous time. The contract's functional form is independent of the …

drift in continuous time. The difficulty in writing an appropriate financial contract in this setting is that the agent can … long-term contract specifies the agent's wage and can force termination of the project. Using techniques from stochastic … calculus similar to Sannikov (2003), we characterize the optimal contract by a differential equation. We show that this …

procedures. A noisy signal, however, means that the optimal contract will involve terms that courts might view as punitive and so …