We consider a decentralized supply chain in which a downstream manufacturer purchases components from an upstream supplier privileged with private information about supply disruption risk. The supplier's initial reliability, asymmetric to the manufacturer, is either low or high. We examine two...

We study a dynamic contracting problem in which size is relevant. The agent may take on excessive risk to enhance short-term gains, which exposes the principal to large, infrequent losses. To preserve incentive compatibility, the optimal contract uses size as an instrument; there is downsizing...

I develop a dynamic agency model of financial contracting, where borrowing constraints appear as part of the optimal contract. The novelty of the paper relative to previous work is that volatility is stochastic and exogenous to the agent behavior. A line of credit appears in the optimal long...