Showing 1 - 10 of 501
We use experiments to test comparative statics predictions of canonical tournament theory. Both the roles of principal and agent are populated by human subjects, allowing us to test predictions for both incentive responses and optimal tournament design. Consistent with theory, we observed an...
Persistent link: https://www.econbiz.de/10010282234
Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide some justifications by sending a costly message. Indeed, it is optimal for the principal to explain her evaluation to the agent if and only if the...
Persistent link: https://www.econbiz.de/10010323871
Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide justification by sending a costly cheap-talk message. I show that the principal explains her evaluation to the agent if the evaluation turns out to be...
Persistent link: https://www.econbiz.de/10009569527
We analyze the interaction of explicit and implicit contracts in a model with selfish and fair principals. Fair principals are willing to honor implicit agreements, whereas selfish principals are not. Principals are privately informed about their types. We investigate a separating equilibrium in...
Persistent link: https://www.econbiz.de/10009518322
We study a dynamic contracting problem in which the principal can allocate his limited capacity between seeking evidence that confirms or that contradicts the agent's effort, as the basis for reward or punishment. Such flexibility calls for jointly designed monitoring and compensation schemes...
Persistent link: https://www.econbiz.de/10012846446
In this paper, we show that whenever the agent's outside option is nonzero, the optimal contract in the continuous-time principal-agent model of Sannikov (2008) is reflective at the lower bound. This means the agent is never terminated or retired after poor performance. Instead, the agent is...
Persistent link: https://www.econbiz.de/10012854897
Previous literature documents that mutual funds' flows increase more than linearly with realized performance. I show this convex flow-performance relationship is consistent with a dynamic contracting model in which investors learn about the fund manager's skill. My model predicts that flows...
Persistent link: https://www.econbiz.de/10012860014
We consider relational contracts for teams in which the agents monitor each other. We demonstrate that providing rents to the agents strengthens peer sanction endowed within the agents' ongoing relationship, which may have a negative effect to induce unproductive collusion as well as a positive...
Persistent link: https://www.econbiz.de/10012863568
We study optimal effort and compensation in a continuous-time model with three-sided moral hazard and cost synergies. One agent exerts initial effort to start the project; the other two agents exert ongoing effort to manage it. The project generates cash flow at a fixed rate over its lifespan;...
Persistent link: https://www.econbiz.de/10012928139
We study a relational contracting model with two agents where each agent faces multiple tasks: effort toward the agent's own project and helping effort toward another agent's project. We first propose the two-step approach, which is useful for characterizing the equilibrium of relational...
Persistent link: https://www.econbiz.de/10013007681