We study the incentive problem between the owners of a firm and its CEO due to the unobservability of the manager's actions. Our model departs from the literature in two ways. First, we assume the effort of the CEO is persistent: his actions affect the performance of the firm for several...

We are in the process of looking at the McDash database on loan-level performance. We want to match the variables analyzed in our model to observable cross-sectional heterogeneity in firm characteristics (servicer practices, age of the firm), or variation across periods in the characteristics of...

A look at the recent trends in the use of grants of restricted stocks and options in the compensation packages of chief executive officers (CEOs) of large, public U.S. companies reveals that there have been important changes. These changes coincide with the introduction of two new regulations:...

Many occupations are subject to learning by doing: Effort at the workplace early in the career of a worker results in higher productivity later on. In such occupations, if effort at work is unobservable, a moral hazard problem also arises. We study a particular specification of learning by doing...

Economist Arantxa Jarque and senior editor David A. Price explore an innovation of the Dodd-Frank Act of 2010, which requires the largest and most complex financial institutions to create resolution plans to follow if the institutions fall into severe financial distress. In these plans, or...

Women have traditionally been underrepresented among governors of the Federal Reserve Board and among presidents of the regional Federal Reserve Banks. This lack of diversity may limit the representation of the interests of women, leave out valuable talent, and affect group dynamics and...

We study the problem of a firm that faces asymmetric information about the persistent productivity of its potential workers. In our framework, a worker's productivity is either assigned by nature at birth, or determined by an unobservable initial action of the worker that has persistent effects...

We study a multiperiod principal-agent problem with moral hazard in which the agent is required to exert effort only in the initial period of the contract. The effort choice of the agent in this first period determines the conditional distribution of output in the following periods. The paper...