This paper investigates monotone solutions of the moral hazard problems without the monotone likelihood ratio property. The optimal monotone solutions are explicitly characterized by a concave envelope relaxation approach for a two-action model in which the principal is risk neutral or exhibits...

This paper studies a moral hazard problem in which the principal can ex ante commit to an information disclosure policy to control the agent’s monetary incentives. The outcome depends on the unverifiable state of nature, in addition to the agent’s effort choice. I characterize the...

The empirical literature often theorizes that managerial overconfidence exacerbates earnings management because overconfidence sends the manager ``down the slippery slope to misreporting". In a principal-agent model with moral hazard, I show that overconfidence only increases the manager's...

A principal hires an agent to learn about the cost of a project (experimentation) and then to execute it (production). The agent is privately informed about the probability that the cost is low, with the high-type agent being relatively more optimistic than the low type. The agent also engages...

This paper proposes a framework to analyze the functioning of the inter-bank liquidity market and the occurrence of liquidity crises. The model relies on three key assumptions: (i) liquidity provisioning is not verifiable -it cannot be contracted upon-, (ii) banks face moral hazard when...

This paper investigates optimal contracts to solve the moral hazard problem with subjective evaluations in the static environment in which the principal privately observes agents’ performances. Despite the limitations of feasible contracts that the principal can credibly offer, we show the...

A principal provides incentives for independent agents. The principal cannot observe the agents' actions, nor does she know the entire set of actions available to them. It is shown that an anti-informativeness principle holds: very generally, robustly optimal contracts must link the incentive...

We analyze the effects of lower bounds on wages, e.g., minimum wages or liability limits, on job design within firms. In our model, two tasks contribute to non-veriable firm value and affect an imperfect performance measure. The tasks can be assigned to either one or two agents. In the absence...