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The Curse of Long Horizons
Bhaskar, Venkataraman - 2018
We study dynamic moral hazard when the principal can only commit to spot contracts. Principal and agent are ex ante symmetrically uncertain about the difficulty of the job, and update their beliefs on observing output. Since the agent's effort is private, he has an additional incentive to shirk...
Persistent link: https://www.econbiz.de/10012907047
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Separation of ownership and control : delegation as a commitment device
Boukouras, Aristotelis - 2011
the project will be completed on time, but the worker receives some unobservable benefit by continuing his employment in … credible, because the project has positive continuation value. We show that hiring a manager can solve this time …
Persistent link: https://www.econbiz.de/10010348626
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The curse of long horizons
Bhaskar, V.; Mailath, George J. - 2016
Persistent link: https://www.econbiz.de/10011544580
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The curse of long horizons
Bhaskar, V.; Mailath, George J. - 2016
Persistent link: https://www.econbiz.de/10011565947
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Double-sided moral hazard, efficiency wages and litigation
Gürtler, Oliver (contributor);  … - 2007
We consider a double-sided moral hazard problem where each party can renege on the signed contract since there does not exist any verifi- able performance signal. It is shown that ex-post litigation can restore incentives of the agent. Moreover, when the litigation can be settled by the parties...
Persistent link: https://www.econbiz.de/10003576494
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New and revised results for "Building reputation for contract renewal: implications for performance dynamics and contract duration"
Kummer, Vanessa; Meusel, Maik; Renner, Philipp; … - 2016
Contract Renewal: Implications for Performance Dynamics and Contract Duration,'' Journal of the European Economic Association … repeatedly receives multi-period contracts and determine the optimal duration of such contracts in the context of an infinitely … the agent's optimal investment decision and the optimal contract duration depend non-monotonically on the information …
Persistent link: https://www.econbiz.de/10011518748
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Standards and incentives under moral hazard with limited liability
Reinshagen, Felix - 2012
We consider a model of moral hazard with limited liability of the agent and effort that is two-dimensional. One dimension of the agent's effort is observable and the other is not. The principal can thusmake the contract conditional not only on outcome but also on observable effort. The...
Persistent link: https://www.econbiz.de/10009490184
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Merger performance and managerial incentives
Kräkel, Matthias; Müller, Daniel - 2014
We consider a two-stage principal-agent model with limited liability in which a CEO is employed as agent to gather information about suitable merger targets and to manage the merged corporation in case of an acquisition. Our results show that the CEO systematically recommends targets with low...
Persistent link: https://www.econbiz.de/10011430291
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Limited liability and the risk-incentive relationship
Budde, Jörg; Kräkel, Matthias - 2008
Several empirical findings have challenged the traditional view on the trade-off between risk and incentives. By combining risk aversion and limited liability in a standard principal-agent model the empirical puzzle on the positive relationship between risk and incentives can be explained....
Persistent link: https://www.econbiz.de/10010383018
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Tournaments with gaps
Imhof, Lorens; Kräkel, Matthias - 2013
A standard tournament contract specifies only tournament prizes. If agents' performance is measured on a cardinal scale, the principal can complement the tournament contract by a gap which defines the minimum distance by which the best performing agent must beat the second best to receive the...
Persistent link: https://www.econbiz.de/10010198511