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Communicating subjective evaluations
Lang, Matthias - 2012 - this version: August 2013
Should principals explain and justify their evaluations? In this paper the principal's evaluation is private … evaluation to the agent if the evaluation turns out to be bad. The justification assures the agent that the principal has not … distorted the evaluation downwards. In equilibrium, the wage increases in the agent's performance, when the principal justifies …
Persistent link: https://www.econbiz.de/10009569527
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Empowerment and the dark side of delegation
Kräkel, Matthias - 2018
The existing delegation literature has focused on different preferences of principal and agent concerning project selection, which makes delegating authority costly for the principal. This paper shows that delegation has a cost even when the preferences of principal and agent are exogenously...
Persistent link: https://www.econbiz.de/10011795221
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Competing Mechanism Games of Moral Hazard : Communication and Robustness
Attar, Andrea - 2011
We consider multiple-principal multiple-agent models of moral hazard: Principals compete through mechanisms in the presence of agents who take unobservable actions. In this context, we provide a rationale for restricting principals to make use of simple mechanisms, which correspond to direct...
Persistent link: https://www.econbiz.de/10013123960
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Incentives and Equilibrium in Agency with Adverse Selection
Faynzilberg, Peter S. - 2015
We show that contracting in agency with voluntary participation may involve incentives for the agent's abstention. Their provision alters the optimality criteria in the principal's decision-making, further distorts the mechanism, and may lead to breakdown of contracting in circumstances where...
Persistent link: https://www.econbiz.de/10013021575
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Hidden Action and Outcome Contractibility : An Experimental Test of Moral Hazard Theory
Hoppe, Eva I.; Schmitz, Patrick W. - 2019
negotiate contracts. In line with contract theory, the contractibility of the outcome plays a crucial role when effort is a …
Persistent link: https://www.econbiz.de/10014105234
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Double Moral Hazard and Renegotiation
Osano, Hiroshi; Kobayashi, Mami - 2003
We examine renegotiation in a double moral hazard model with an ex ante budget balancing constraint when both the principal and the agent are allowed to make a renegotiation offer even though the principal proposes an initial contract. Under a belief restriction, any perfect-Bayesian equilibrium...
Persistent link: https://www.econbiz.de/10014074819
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When trust fades... : can optimal mechanisms for policy decisions always be designed?
Major, Iván - 2013
Governments must usually take policy decisions with an imperfect knowledge of the economic actors' type or the actors' effort level. These issues are addressed within the framework of classic adverse selection or moral hazard models. I discuss in this paper how would the government’s and the...
Persistent link: https://www.econbiz.de/10010211955
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Insurance Agency Contract with ‘No Claim Bonus’
Sarkar, Sumit - 2019
Traditionally insurance agents are incentivised by payment of a commission on the premium they generate. A bonus payment received by the agent from the insurer, when the insured does not make a claim, is referred to as ‘No claim bonus' (NCB). NCB rewards the agent for her / his effort in...
Persistent link: https://www.econbiz.de/10012901106
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Optimal contracts with a risk-taking agent
Barron, Daniel; Georgiadis, George; Swinkels, Jeroen M. - In: Theoretical economics : TE ; an open access journal in … 15 (2020) 2, pp. 715-761
Consider an agent who can costlessly add mean-preserving noise to his output. To deter such risk-taking, the principal optimally offers a contract that makes the agent's utility concave in output. If the agent is risk-neutral and protected by limited liability, this concavity constraint binds...
Persistent link: https://www.econbiz.de/10012308620
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Can a bonus overcome moral hazard? : an experiment on voluntary payments, competition, and reputation in markets for expert services
Angelova, Vera; Regner, Tobias - 2016
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/10011530053