rent due to the persistent belief manipulation effect. We characterize the optimal contract using the dynamic programming … technique in which information rent is the unique state variable. In the optimal contract, the optimal effort is front …-loaded and decreases stochastically over time. Furthermore, the optimal contract exhibits an option-like feature in that …

any manager who is unfavorable to some investors. The contract problem has hidden types, hidden actions, hidden knowledge …

contingent claims in a complete asset market. The manager is given a contract so that at equilibrium she chooses the plan … preferred by shareholders. We show that the contract should restrict the manager from trading. Moreover, the marginal utility of …

distribution function. However, this boundary condition does have sensible economic interpretations and our optimal contract …