Recent studies conclude that small firms have higher but more variable growth rates than large firms. To explore how this empirical regularity affects moral hazard and investment, we develop an agency model with a firm size process having two features: the drift is controlled by the agent's...

We explain the large observed volatility of commercial and industrial loans as a Markov equilibrium of an economy with limited commitment in which all credit is unsecured and self-enforcing. Aggregate income growth shocks affect gains from future asset market trading, inducing fluctuations in...

This paper presents a dual approach to the standard agency model. We formulate the dual problem corresponding to the principal-agent problem under the assumption that the firstorder approach (FOA) is valid. This dual formulation generates a convex conjugate of a distinctive form, which...

Recent empirical studies conclude that small firms have higher but more variable growth rates than large firms. To explore the effect of this size-dependence regularity on moral hazard and investment, we develop a continuous-time agency model with time-varying firm size. Firm size is a diffusion...

This note explores how to evaluate an agent's performance in standard incentive contracts. We show that the MPS criterion proposed by Kim (1995) becomes a tight condition for one performance measurement system to be more informative than another, as long as the first-order approach can be...

Undoubtedly inspired by recent advances in technology-driven payment systems such as mobile payment systems, cryptocurrencies, and blockchain technologies, recent years have seen central banks worldwide explore the possibility of issuing digital forms of fiat money called central bank digital...

This study investigates the economic implications of blockchain-based academic journals, proposed by the recent computer science literature, in which authors and referees are individually incentivized. We construct a model in which the journal publishes qualified papers under two types of...