We develop a structural model to investigate how risk, uncertainty about project quality, and asymmetric beliefs affect decision-making in dynamic principal-agent relationships. We consider a principal-agent environment in which a cash-constrained agent with a project approaches a principal for...

We develop a dynamic principal-agent model to show how imperfect public information and asymmetric beliefs about payoff-relevant parameters, agency conflicts, and the agent's implicit incentives to influence the principal's posterior beliefs through his unobservable actions interact to affect...

We develop a structural model to investigate the effects of asymmetric beliefs and agency conflicts on dynamic principal-agent relationships. Our model differs from previous models by incorporating three key features in a unified framework: (i) asymmetric beliefs and risk attitudes, (ii) actions...

We develop a structural model to investigate the effects of asymmetric beliefs and agency conflicts on dynamic principal--agent relationships. Optimism has a first-order effect on incentives, investments, and output, which could reconcile the private equity puzzle. Asymmetric beliefs cause...

We develop a dynamic principal–agent model to show how imperfect public information and asymmetric beliefs about payoff-relevant parameters, agency conflicts, and the agent's implicit incentives to influence the principal's posterior beliefs through his unobservable actions interact to affect...