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Optimal Monitoring Schedule in Dynamic Contracts

Chen, Mingliu - 2020

Consider a setting in which a principal induces effort from an agent to reduce the arrival rate of a Poisson process of adverse events. The effort is costly to the agent, and unobservable to the principal, unless the principal is monitoring the agent. Monitoring ensures effort but is costly to...

Persistent link: https://www.econbiz.de/10012853741

Agency Theory and Work Incentives

Lisciandra, Maurizio - 2016

This paper is an extensive review of agency theory applied to labour incentives. It introduces a generalised principal … agency theory and, to a larger extent, labour incentives …

Persistent link: https://www.econbiz.de/10013007926

Optimal Dynamic Contracts with Moral Hazard and Costly Monitoring

Piskorski, Tomasz - 2016

We introduce a tractable dynamic monitoring technology into a continuous-time moral-hazard problem and study the optimal long-term contract between principal and agent. Monitoring adds value by allowing the principal to reduce the intensity of performance-based incentives, reducing the...

Persistent link: https://www.econbiz.de/10013009155

Moral Hazard, Dynamic Incentives, and Ambiguous Perceptions

Dumav, Martin - 2021

This paper considers dynamic moral hazard settings, in which the consequences of the agent's actions is not precisely understood. In a new continuous-time principal-agent model with drift ambiguity, the agent's unobservable action translates to drift set for the diffusion processes that describe...

Persistent link: https://www.econbiz.de/10013313165

Hidden Action and Outcome Contractibility : An Experimental Test of Moral Hazard Theory

Hoppe, Eva I.; Schmitz, Patrick W. - 2019

negotiate contracts. In line with contract theory, the contractibility of the outcome plays a crucial role when effort is a …

Persistent link: https://www.econbiz.de/10014105234

Hidden action, identification, and organization design

Schnedler, Wendelin - 2010 - This version: November 2010

Incentives often fail in inducing economic agents to engage in a desirable activity; implementability is restricted. What restricts implementability? When does re-organization help to overcome this restriction? This paper shows that any restriction of implementability is caused by an identifi...

Persistent link: https://www.econbiz.de/10008758145

Optimal incentive contracts under moral hazard when the agent is free to leave

Englmaier, Florian; Mühlheußer, Gerd; Roider, Andreas - 2010

We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free to leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal...

Persistent link: https://www.econbiz.de/10008822065

Objective versus subjective performance evaluations

Terstiege, Stefan - 2013

Why does incentive pay often depend on subjective rather than objective performance evaluations? After all, subjective evaluations entail a credibility issue. While the most plausible explanation for this practice is lack of adequate objective measures, I argue that subjective evaluations might...

Persistent link: https://www.econbiz.de/10010198959

Subjective evaluation versus public information

Bester, Helmut; Münster, Johannes - 2013

This paper studies a principal-agent relation in which the principal's private information about the agent's effort choice is more accurate than a noisy public performance measure. For some contingencies the optimal contract has to specify ex post inefficiencies in the form of inefficient...

Persistent link: https://www.econbiz.de/10009752336

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. Increasing risk leads to a less informative performance signal. Under …

Persistent link: https://www.econbiz.de/10010383018