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Hidden Action and Outcome Contractibility : An Experimental Test of Moral Hazard Theory
Hoppe, Eva I.; Schmitz, Patrick W. - 2019
In a laboratory experiment with 754 participants, we study the canonical one-shot moral hazard problem, comparing treatments with unobservable effort to benchmark treatments with verifiable effort. In our experiment, the players endogenously negotiate contracts. In line with contract theory, the...
Persistent link: https://www.econbiz.de/10014105234
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Peer effects and incentives
Kräkel, Matthias - 2014
In a multi-agent setting, individuals often compare own performance with that of their peers. These comparisons influence agents incentives and lead to a noncooperative game, even if the agents have to complete independent tasks. I show that depending on the interplay of the peer effects, agents...
Persistent link: https://www.econbiz.de/10011430294
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Incentive contracts when agents distort probabilities
Gonzalez Jimenez, Victor H. - In: Quantitative economics : QE ; journal of the … 15 (2024) 3, pp. 607-653
I show that stochastic contracts generate powerful incentives when agents suffer from probability distortion. When implementing these contracts, the principal can target probability distortions in order to inflate the agent's perceived benefits of exerting high levels of effort. This novel...
Persistent link: https://www.econbiz.de/10015053193
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Learning from Failures : Optimal Contract for Experimentation and Production
Khalil, Fahad - 2019
Before embarking on a project, a principal must often rely on an agent to learn about its profitability. We model this learning as a two-armed bandit problem and highlight the interaction between learning (experimentation) and production. We derive the optimal contract for both experimentation...
Persistent link: https://www.econbiz.de/10012892041
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Learning from Failures : Optimal Contract for Experimentation and Production
Khalil, Fahad - 2020
Before embarking on a project, a principal must often rely on an agent to learn about its profitability. We model this learning as a two-armed bandit problem and highlight the interaction between learning (experimentation) and production. We derive the optimal contract for both experimentation...
Persistent link: https://www.econbiz.de/10012851564
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Contracts that Reward Innovation : Delegated Experimentation with an Informed Principal
Sun, Yiman - 2018
We examine the nature of contracts that optimally reward innovations in a risky environment, when the innovator is privately informed about the quality of her innovation and must engage an agent to develop it. We model the innovator as a principal who has private but imperfect information about...
Persistent link: https://www.econbiz.de/10012932065
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Learning from failures : optimal contract for experimentation and production
Khalil, Fahad; Lawarrée, Jacques; Rodivilov, Alexander - 2018
Before embarking on a project, a principal must often rely on an agent to learn about its profitability. We model this learning as a two-armed bandit problem and highlight the interaction between learning (experimentation) and production. We derive the optimal contract for both experimentation...
Persistent link: https://www.econbiz.de/10011926023
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Can a bonus overcome moral hazard? : experimental evidence from markets for expert services
Angelova, Vera; Regner, Tobias - 2018
Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor...
Persistent link: https://www.econbiz.de/10011881706
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Strategic incomplete contracts : theory and experiments
Erkal, Nisvan; Wu, Steven Y.; Roe, Brian - 2014
We develop a model of strategic contractual incompleteness that identifies conditions under which principals might omit even costlessly verifiable terms. We then use experiments to test comparative statics predictions of the model. While it is well known that verifiability imperfections can...
Persistent link: https://www.econbiz.de/10010457849
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Incentive Contracts for Teams : Experimental Evidence
Landeo, Claudia M.; Spier, Kathryn E. - 2015
interaction among team members positively affects the principal's payoff. Greater team cooperation is successfully induced with … communication on team cooperation in the absence of ongoing team interaction. Fostering communication among team members does not … significantly affect the principal's payoff, suggesting that agents' communication is an imperfect substitute for ongoing team …
Persistent link: https://www.econbiz.de/10014145295