Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004: This paper provides an analytical framework for studying principal-agent problems with adverse selection and limited commitment. By allowing the principal to use noisy communication we solve two fundamental problems of...

We explore why venture capital funds limit the amount of capital they raise and do not reinvest the proceeds. This structure is puzzling because it leads to a succession of several funds financing each new venture which multiplies the well known agency problems. We argue that an inside investor...

Although the future socio-economic benefits of a new fibre-based ('next generation access', NGA) telecommunications infrastructure seem to be uncontroversial, a universal NGA coverage appears to be a rather unrealistic objective without government intervention. We contend, however, that the...

Oliver Hart and Bengt Holmström were awarded the 2016 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for their fundamental contributions to contract theory. This article offers a short summary and discussion of their path breaking work.

I show that it is optimal to separate non-benevolent regulators when regulated projects are large. Separation prevents regulators from coordinating to appropriate all of the agent's informational rent when they know the type of the latter; therefore, there is a trade-off between saving on...

If agents are exposed to continual competitive pressure, how does a short-term variation of the severity of the competition affect agents\' performance? In a real-effort laboratory experiment, we study a one-time increase in incentives in a sequence of equally incentivized contests. Our results...

I show that deterministic dynamic contracts between a principal and an agent are always at least as profitable to the principal as stochastic ones, if the so-called first-order approach in dynamic mechanism design is satisfied. The principal commits, while the agent\'s type evolution follows a...

The 2016 Nobel Memorial Prize in Economic Sciences was awarded to Oliver Hart and Bengt Holmström for their work on contract theory. Contract theory is a subfield of game theory where the conflict between the owner - the principal - and the CEO - or agent - is at the centre of interest. In the...

Summary Transaction costs are an obstacle to the efficient operation of selective contracting. Health care delivery systems (§140 a-d SGB V) and selective contracting between networks of service providers and purchasers are advocated as an effective method to improve the performance of the...

Local labor markets are characterized by rigidities in their patterns of adjustment to short-run fluctuations. With or without unions, fluctuations in employment, hours worked, and money wages are unlike the patterns predicted by conventional discrete-exchange labor-market theories. Moreover...