We consider an economic model of child development with multiple stages. Due to incomplete information, parents are not able to tailor their investments to their child’s type when the child is young. We show that incomplete information weakens the importance of early investments in children...

This article explores a dynamic moral hazard setting in which a principal hires a team of agents for a project. As the project generates revenue upon completion, the principal incentivizes agents' efforts by designing bonuses for success. If bonuses are provided through spot or...

To study whether a soft commitment device can help students succeed, we conduct a randomized field experiment and follow a cohort of tertiary students over six years. Students can commit to following their recommended study program structure, and they receive reminders each semester. This easily...

This paper studies the interplay between deadlines and cognitive limitations. We analyze an agent's decision to complete a one-off task under a deadline. Postponing the task can be beneficial for the agent; missing the deadline, however, leads to a drop in the agent's rewards. If the agent...

We consider a principal-agent model with moral hazard where the agent’s knowledge about the performance measure is ambiguous and he is averse towards ambiguity. We show that the principal may optimally provide no incentives or contract only on a subset of all informative performance measures....

This paper extends the standard principal-agent model with moral hazard to allow for agents having reference- dependent preferences according to Köszegi and Rabin (2006, 2007). The main finding is that loss aversion leads to fairly simple contracts. In particular, when shifting the focus from...