Subjective evaluations are widely used, but call for different contracts from classical moral-hazard settings. Previous … literature shows that contracts require payments to third parties. I show that the (implicit) assumption of deterministic … contracts makes payments to third parties necessary. This paper studies incentive contracts with stochastic compensation, like …

Subjective evaluations are widely used, but call for different contracts from traditional moral-hazard settings …. Previous literature shows that contracts require payments to third parties, which real-world contracts rarely use. I show that … the implicit assumption of deterministic contracts makes payments to third parties necessary. This paper studies …

I show that deterministic dynamic contracts between a principal and an agent are always at least as profitable to the … correlation of stochastic contracts across periods that the usual restriction in the literature to deterministic contracts is …

show how the law of insurance contracts should allow insurers to incentivize policyholders to exert an adequate level of …

We analyze optimal contracts in a hierarchy consisting of a principal, a supervisor and an agent. The supervisor is …

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 source of motivation is absent in contracts traditionally regarded as …