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Moral Hazard in Partnerships
Gaynor, Martin - 1990
incentives depends upon risk preferences, for which data are typically unavailable. We are able to overcome this difficulty due … consider a two-stage model in which agents choose effort in response to incentives and in which the firm can choose two … different instruments to affect incentives and to spread risk: the compensation method and the number of members. There are two …
Persistent link: https://www.econbiz.de/10012475660
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Incentives and Government Relief for Risk
Kaplow, Louis - 1989
. This paper explores the effect of such relief on incentives and the allocation of risk in a model with private insurance …
Persistent link: https://www.econbiz.de/10012476041
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A Theory of Firm Decline
Clementi, Gian Luca - 2009
We study the problem of an investor who buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter's operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of repeated...
Persistent link: https://www.econbiz.de/10012463457
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Inventor Moral Hazard in University Licensing : The Role of Contracts
Dechenaux, Emmanuel - 2008
We examine commonly observed forms of payment, such as milestones, royalties, or consulting contracts as ways of engaging inventors in the development of licensed inventions. Our theoretical model shows that when milestones are feasible, royalties are not optimal unless the licensing firm is...
Persistent link: https://www.econbiz.de/10012464422
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Real Options in a Dynamic Agency Model, with Applications to Financial Development, IPOs, and Business Risk
Philippon, Thomas - 2007
We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the...
Persistent link: https://www.econbiz.de/10012465063
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Choosing Agents and Monitoring Consumption : A Note on Wealth as a Corruption-Controlling Device
Tella, Rafael Di - 2007
matter, we show that monitoring consumption introduces a tendency towards low powered incentives (and more generally low …
Persistent link: https://www.econbiz.de/10012465490
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Contract Renegotiation in Agency Problems
Edlin, Aaron S. - 1997
-known danger is that the principal can hold up the agent, undermining the agent's investment incentives. We begin by identifying a …
Persistent link: https://www.econbiz.de/10012472728
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Subjective Performance Measures in Optimal Incentive Contracts
Baker, George - 1993
Objective measures of performance are seldom perfect. In response, incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined use of subjective and objective performance measures...
Persistent link: https://www.econbiz.de/10012474466
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The Generalized Informativeness Principle
Chaigneau, Pierre - 2014
This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even...
Persistent link: https://www.econbiz.de/10012457937
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Moral Hazard, Incentive Contracts and Risk : Evidence from Procurement
Lewis, Gregory - 2011
Deadlines and penalties are widely used to incentivize effort. We model how these incentive contracts affect the work rate and time taken in a procurement setting, characterizing the efficient contract design. Using new micro-level data on Minnesota highway construction contracts that includes...
Persistent link: https://www.econbiz.de/10012461011