's contract. Cost observations are obscured in stochastic settings and so perfect inferences about underlying private information … are not possible. However, the design of the regulatory contract affects how much information is gleaned. When learning …

"information cascade" in which later predictions match the early announcements. This paper reports an experiment in which private …

its market and must contract with a bank for outside funds. Contracts between the bank and the monopolist are short … contracting without commitment---the first period contract contains signal dampening and experimentation effects. More importantly … potential game between incumbent and entrant should entry occur. As a consequence of this, the first period contract is …

A central insight of agency theory is that when a principal offers a contract to a privately informed agent, the … report about an experiment with 508 participants designed to test whether this fundamental trade-off is actually relevant. In … particular, we investigate settings with both exogenous and endogenous information structures. We find that theory is indeed a …

engaging in the activity causes others to offer larger rewards. Our theory yields the testable prediction that such effects are …

that after the first period the principal designs a second contract, taking the information available about the state of … separating first period contract is optimal. The second change is that, unlike the deterministic setting where the high type …

over time. Contracts are short term. The principal designs the second contract, taking the information available about the …

over-provide effort relative to a fully rational benchmark, and improves efficiency. We identify contract features, and …

updates beliefs using Bayes' rule. An exploitation contract in which the agent is only compensated for his effort if the extra … profit materializes maximizes the principal's profits. In this optimal contract, the agent's principal-expected compensation …