We consider a problem where a Principal aims to design a reward function to a field of heterogeneous agents. In our setting, the agents compete with each other through their rank within the population in order to obtain the best reward. We first explicit the equilibrium for the mean-field game...

Therapeutic reference pricing (TRP) of pharmaceuticals is widely thought to steer drug innovation incentives away from `me-too' innovations with little therapeutic benefit. However, the present paper shows that, if the feasible scope for innovation is to develop drugs with different degrees of...

Papers in contest design often find a trade-off between incentive and selection. We show that it is possible to improve contest performance in both dimensions as long as the losers can proceed to the next stage and the winners have their cost of effort reduced. We also found that the comparison...

Using detailed mutual fund holdings in the US market, we estimate active mutual fund managers’ loss aversion as a function of both funds’ past performance and asset allocations. We document a substantial variation in loss aversion over time. We further find managers' loss aversion is higher...

In this paper, we study the conditions under which termination is a useful incentive device in the canonical dynamic principal-agent moral hazard model of Sannikov (2008). We find that temporary suspension of the agent after poor performance dominates termination if the principal's outside...

In this paper, we investigate individuals’ investment in status in an environment where no monetary return can possibly be derived from reaching a better relative position. We use a real-effort experiment in which we permit individuals to learn and potentially improve their relative position...

We study the effect of user incentives on software security in a network of individual users under costly patching and negative network security externalities. For proprietary software or freeware, we compare four alternative policies to manage network security: (i) Consumer self patching (where...

The number of drugs entering the US pharmaceutical market is at a low point. At the same time, demand for innovative therapeutic alternatives has been rising in numerous fields, including antibiotics for multidrug resistant organisms and drugs for tropical diseases prevalent in low-income...