contracts that are typically observed in practice such as salaries, lump-sum bonuses, and high-performance commissions. …

information about the agent's quality improves. In the standard spot-market setup, by contrast, when the parameter measures the … agent's "quality", the Pareto frontier shifts inwards with better information. Commitment is therefore more valuable when …

information about the agent's quality improves. In the standard spot-market setup, by contrast, when the parameter measures the … agent's "quality", the Pareto frontier shifts inwards with better information. Commitment is therefore more valuable when … accumulates. -- principal-agent model ; optimal contract ; learning ; private information ; reputation ; career …

-compensation contracts. Using the introduction of exchanged-traded weather derivatives as a natural experiment, we find that executives who … firms' exposure to an important source of risk influences the design of their incentive-compensation contracts …

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 …

Why are contracts not fully indexed? In a setting in which fully indexed contracts are feasible, we find that when … price-level data are gathered with delay, these contracts are not renegotiation-proof. The contracts that replace them …