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Essays On Contract Design
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Book Synopsis Essays on Contract Design and Incentive Provision by : Eva I. Hoppe-Fischer
Download or read book Essays on Contract Design and Incentive Provision written by Eva I. Hoppe-Fischer and published by Springer. This book was released on 2019-02-19 with total page 211 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contract theory, which emphasizes the importance of unverifiable actions and private information, has been a highly active field of research in microeconomics in the last decades. This thesis is divided into two parts. Part I consists of three chapters that study contract-theoretic models which are motivated by the classic procurement problem of a principal who wants an agent to deliver a certain good or service. In such models it is typically assumed that decision makers are interested in their own monetary payoffs only. Moreover, they have unlimited cognitive abilities and behave in a perfectly rational way. Yet, in practice people often do not behave this way. While empirical research is very difficult in contract theory, laboratory experiments have recently turned out to be an important source of data. In Part II, three experimental studies are presented that investigate contract-theoretic problems brought up in Part I.
Book Synopsis Essays on Contract Design and Incentive Provision by : Eva I. Hoppe
Download or read book Essays on Contract Design and Incentive Provision written by Eva I. Hoppe and published by . This book was released on 2011 with total page 211 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Contract Design by : Walter Alberto Cont
Download or read book Essays on Contract Design written by Walter Alberto Cont and published by . This book was released on 2001 with total page 272 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Contracts and Organizational Design by :
Download or read book Essays on Contracts and Organizational Design written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Essays on contracts and organizational design.
Book Synopsis Essays on Contract Design in Marketing by : Ying Bao
Download or read book Essays on Contract Design in Marketing written by Ying Bao and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis examines how firms design their contracts in different marketing contexts. The first essay theoretically investigates the impact of external advances in consumption tracking technologies on the design of pricing contracts. Using the context of mobile banking applications that help consumers track their spending and avoid penalty fees for overdrawing their accounts, I find that in response to the availability of consumption tracking, a firm would lower its penalty fee (just enough to disincentivize consumers from using it). As a result, consumer welfare improves even if consumers do not use consumption tracking technology. When consumers vary in their forgetfulness, the availability of consumption tracking technology can hurt some consumers, while helping others. The second essay examines contracts in the context of new product development. I develop a theoretical model to explain the prevalence of standardized incentive plans, which provide a reward without considering the differential amount of resources invested in the projects. I model the phenomena where a representative project manager has private information about the quality of her own project and can manipulate the signal of project quality that the organization receives during the identification/resource-allocation stage. I show that when the manager manipulates the signal, a standardized incentive plan encourages the manager of a high-quality project to manipulate more and stand out. I argue that under some conditions a standardized incentive plan can be preferred because such a plan leads to more accurate resource allocation, even though a customized incentive plan is more efficient in inducing implementation effort.
Book Synopsis Essays on Contract Design in Behavioral and Development Economics by : Jonathan de Quidt
Download or read book Essays on Contract Design in Behavioral and Development Economics written by Jonathan de Quidt and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Contract Design Under Incomplete Enforcement by : Paula Cordero-Salas
Download or read book Essays in Contract Design Under Incomplete Enforcement written by Paula Cordero-Salas and published by . This book was released on 2011 with total page 185 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This dissertation applies relational contract theory to study the optimal incentive provision in situations when formal enforcement is too costly. Essay one considers a theoretical redistribution of bargaining power among business partners who trade repeatedly and that traditionally hold asymmetric power to negotiate contract terms. I included a bargaining process in a relational contracts model to analyze the economic consequences of shifting bargaining power under different enforcement regimes. The model predicts that as the agent's bargaining power increases, her incentive payments decrease even though her total compensation increases. Thus, efficiency wage contracts are more likely to be observed than contingent performance contracts in markets where agents have bargaining power. In contexts where enforcement is weak, a transfer of bargaining power can erode market efficiency in a dynamic relational contracting environment. If principals lose power coupled with the absence of enforcement, they may find the short-term gains of reneging on contractual promises more attractive than long-term benefits of faithfully executing a contract where they hold less power. As a consequence trade is more likely to break down. In this case, the agent is better off exercising less bargaining power than she has. Nonetheless, the model also predicts that such a collapse in good-faith execution of contracts in the light of such a power shift may not occur if some minimum payment for contract participation is enforced. Essay two provides experimental evidence on the theoretical predictions from essay one. I implement an experimental design that adjusts the bargaining power of sellers (agents) and the enforceability of the contract. I find that the vast majority of contracts take the form of efficiency wage contracts instead of contingent performance contracts when enforcement is partially incomplete and sellers have more bargaining power than buyers. The total contracted and actual compensation increase with the bargaining power of the sellers. However, sellers' profits are found to increase only if a part of the total payment is third-party enforceable. In this case, observed surplus and efficiency are lower than predictions. When no part of a contract is third-party enforceable, more cooperative relationships emerge, exhibiting higher quality provision resulting in higher surplus and efficiency while rent sharing is lower. The result is explained by the stronger buyer's deviation, confirming predictions from essay one. Essay three considers the application of relational contracts as a mechanism for the reduction of carbon emissions from deforestation and forest degradation (REDD). I compared the structure of the optimal relational contract in the presence of purely self-interested participants to the optimal structure when participants are motivated by other preferences including altruism, spite, inequality aversion or warm-glow concerns. I find that the optimal contract structure only differs from the benchmark case of self-interested agents when seller preferences are different than only profit-maximizing preferences or if either party is inequality averse. Moreover, I also show that the presence of other regarding preferences increases or decreases the likelihood of cooperation in the long-term relationship relative to the case of self-interested participants.
Book Synopsis Two essays on procurement contract design by : Jen-Yi Chen
Download or read book Two essays on procurement contract design written by Jen-Yi Chen and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Seventy-nine Short Essays on Design by : Michael Bierut
Download or read book Seventy-nine Short Essays on Design written by Michael Bierut and published by Chronicle Books. This book was released on 2012-03-20 with total page 272 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seventy-nine Short Essays on Design brings together the best of designer Michael Bierut's critical writing—serious or humorous, flattering or biting, but always on the mark. Bierut is widely considered the finest observer on design writing today. Covering topics as diverse as Twyla Tharp and ITC Garamond, Bierut's intelligent and accessible texts pull design culture into crisp focus. He touches on classics, like Massimo Vignelli and the cover of The Catcher in the Rye, as well as newcomers, like McSweeney's Quarterly Concern and color-coded terrorism alert levels. Along the way Nabakov's Pale Fire; Eero Saarinen; the paper clip; Celebration, Florida; the planet Saturn; the ClearRx pill bottle; and paper architecture all fall under his pen. His experience as a design practitioner informs his writing and gives it truth. In Seventy-nine Short Essays on Design, designers and nondesigners alike can share and revel in his insights.
Book Synopsis The Design of Agency Relations by : Dean V. Williamson
Download or read book The Design of Agency Relations written by Dean V. Williamson and published by . This book was released on 1999 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Labor Market Contracts' Design and Implications on Workers' Incentives and Productivity by : Allan Dizioli
Download or read book Essays on Labor Market Contracts' Design and Implications on Workers' Incentives and Productivity written by Allan Dizioli and published by . This book was released on 2012 with total page 107 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Contract Theory and Mechanism Design by : Alexander Rodivilov
Download or read book Essays on Contract Theory and Mechanism Design written by Alexander Rodivilov and published by . This book was released on 2017 with total page 109 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation investigates optimal contracts for experimentation and a matching problem for the runway slot allocation. The first chapter of my dissertation examines the role of monitoring in experimentation where agents may observe success privately. In the benchmark model without monitoring, private observability of success is inconsequential as the agent never wants to delay announcing success. However, with monitoring of the agent's effort, private observability of success plays a role in choosing the optimal time for monitoring. When success is observed publicly, the optimal time for a principal to hire a monitor is at the start of the relationship. On the contrary, if the agent observes success privately, and the discount factor is high enough, monitoring is performed during the final period. The second chapter discusses optimal contracts for both experimentation and production. It can be optimal to pay a rent after failure and over experimentation can be optimal. Over production can occur in the exploitation phase. The third chapter considers a financially significant matching problem that emerges when inclement weather conditions strike an airport and runway slots must be reallocated.
Book Synopsis Contract Design in the United States Federal Government by : Young Woon Kim
Download or read book Contract Design in the United States Federal Government written by Young Woon Kim and published by . This book was released on 2010 with total page 177 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This dissertation is structured to provide three essays on contract design decisions in U.S. federal agencies: the importance of contract design, the influence of transaction costs and resource dependence on contract duration, and the bargaining risks and contract type decision.
Book Synopsis Essays on Contract Theory by : Alice Peng-Ju Su
Download or read book Essays on Contract Theory written by Alice Peng-Ju Su and published by . This book was released on 2014 with total page 87 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is primarily on the contractual design to account for various source of information asymmetry in a principal-agent(s) relationship. In the first chapter, I study the optimal provision of team incentives with the feasibility for the agents to coordinate private actions through repeated interaction with imperfect public monitoring. As the agents' imperfect monitoring of private actions is inferred from the stochastically correlated measurements, correlation of measurement noise, besides its risk sharing role in the conventional multiple-agent moral hazard problem, is crucial to the accuracy of each agent's inference on the other's private action. The principal's choice of performance pay to provide incentive via inducing competition or coordination among the agents thus exhibits the tradeoff between risk sharing and mutual inference between the agents. I characterize the optimal form of performance pay with respect to the correlation of measurement noise and find that it is not monotonic as suggested by the literature. In the second chapter, I study the optimal incentive provision in a principal-agent relationship with costly information acquisition by the agent. When it is feasible for the principal to induce or to deter perfect information acquisition, adverse selection or moral hazard arises in response to the principal's decision, as if she is able to design a contract not only to cope with an existing incentive problem, but also to implement the existence of an incentive problem. The optimal contract to implement adverse selection by inducing information acquisition, comparing to the second best menu, exhibits a larger rent difference between an agent in an efficient state and whom in an inefficient state. The optimal contract to implement moral hazard by deterring information acquisition, comparing to the second best debt contract, prescribes a lower debt and an equity share of output residual. With imperfect information acquisition or private knowledge of information acquiring cost, the contract offered to an uninformed agent is qualitatively robust, and that to the informed exhibits countervailing incentives. I relax the assumption of complete contracting and study truthful information revelation in an incomplete contracting environment in the third chapter. Truthful revelation of asymmetric information through shared ownership (partnership) is incorporated into the Property Right Theory of the firms. Shared ownership is optimal as an information transmission device, when it is incentive compatible within the relationship as well as when the relationship breaks, at the expense of the ex-ante incentive to invest in the relationship-specific asset as the hold-up concern is not efficiently mitigated. Higher (lower) level of integration is optimal with a lower marginal value of asset if the information rent effect is stronger (weaker) than the hold-up effect.
Book Synopsis Essays in Robust Mechanism and Contract Design by : Aleksei Suzdaltsev
Download or read book Essays in Robust Mechanism and Contract Design written by Aleksei Suzdaltsev and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, we propose solutions to three problems in the area of robust mechanism design. The first two problems concern revenue maximization by a seller facing several potential buyers whose knowledge of the probability distribution of buyers' valuations is scarce. The third problem concerns contracting under unknown production technology. More specifically: In Chapter 2 (first substantive chapter), we consider the following model. An indivisible object may be sold to one of n agents who know their valuations of the object. The seller would like to use a revenue-maximizing mechanism but her knowledge of the values' distribution is limited: she knows only the means (which may be different) an upper bound for valuations. Valuations may be correlated. Using a constructive approach based on duality, we prove that a mechanism that maximizes the worst-case expected revenue among all deterministic dominant-strategy incentive compatible, ex post individually rational mechanisms takes the following form: (1) the bidders submit bids; (2) for each bidder, a bidder-specific linear function of the bid is calculated (we call it a ``linear score''); (3) the object is awarded to the agent with the highest score, provided it's nonnegative; (4) the winning bidder pays the minimal amount he would need to bid to still win in the auction. The set of optimal mechanisms includes other mechanisms but all those have to be close to the optimal linear score auction in a certain sense. When means are high, all optimal mechanisms share the linearity property. Second-price auction without a reserve is an optimal mechanism when the number of symmetric bidders is sufficiently high. In Chapter 3, we consider a related problem in which the valuations are constrained to be independent draws from a partially known distribution. The seller knows one or two moments of the distribution. We ask what would be a reserve-price in a second-price auction that maximizes worst-case expected revenue. Using a technique different from Chapter 2, we prove that it is always optimal to set the reserve price to seller's own valuation. However, the maxmin reserve price may not be unique. If the number of bidders is sufficiently high, all prices below the seller's valuation, including zero, are also optimal. In the final chapter, we seek a robust solution of a hidden-action, rather than a hidden-information problem. A principal is uncertain about a technology mapping an agent's effort to the distribution of output. The agent is risk neutral and there is a participation constraint but no limited liability constraint. Transfers can be costly. An example of this setting is the case where the principal is a society trying to properly incentivize a firm to carry out innovation. We first show that when the principal employs minimax-regret criterion in the face of the technological uncertainty, an optimal contract is affine. We then characterize the full set of optimal contracts. A contract is optimal if and only if it lies within certain affine, increasing bounds that collapse to a point when output reaches its maximum value.
Book Synopsis Changing Concepts of Contract by : David Campbell
Download or read book Changing Concepts of Contract written by David Campbell and published by Springer. This book was released on 2017-02-28 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: Changing Concepts of Contract is a prestigious collection of essays that re-examines the remarkable contributions of Ian Macneil to the study of contract law and contracting behaviour. Ian Macneil, who taught at Cornell University, the University of Virginia and, latterly, at Northwestern University, was the principal architect of relational contract theory, an approach that sought to direct attention to the context in which contracts are made. In this collection, nine leading UK contract law scholars re-consider Macneil's work and examine his theories in light of new social and technological circumstances. In doing so, they reveal relational contract theory to be a pertinent and insightful framework for the study and practice of the subject, one that presents a powerful challenge to the limits of orthodox contract law scholarship. In tandem with his academic life, Ian Macneil was also the 46th Chief of the Clan Macneil. Included in this volume is a Preface by his son Rory Macneil, the 47th Chief, who reflects on the influences on his father's thinking of those experiences outside academia. The collection also includes a Foreword by Stewart Macaulay, Malcolm Pitman Sharp Hilldale Professor Emeritus at the University of Wisconsin-Madison, and an Introduction by Jay M Feinman, Distinguished Professor of Law at Rutgers School of Law.
Book Synopsis Essays on Mechanism Design and the Informed Principal Problem by : Nicholas C. Bedard
Download or read book Essays on Mechanism Design and the Informed Principal Problem written by Nicholas C. Bedard and published by . This book was released on 2013 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt: Three models of a privately informed contract designer (a principal) are examined. In the first, I study how much private information the principal wants to acquire before offering a contract to an agent. Despite allowing her to acquire all information for free, I prove in a general environment that there is a nontrivial set of parameters for which it is strictly suboptimal for the principal to be completely informed, regardless of the continuation equilibrium following any information acquisition choice. This result holds even when the principal is able to employ the most general mechanisms available and, in particular, when she can choose her most favourable full-information continuation equilibria. Further, in a specialized environment I characterize the principal's optimal information choice. The second is a two-state principal-agent model with moral hazard in which the principal knows the state but the agent does not. This model is relevant to situations where an employer has private information about the productivity of a worker in a particular task while the worker has private information about the effort she exerts on the job. Much of the literature on this subject restricts the employer to offer contracts that leave her no discretion once a contract is accepted, while more general contracts may allow the employer to exercise discretion after acceptance; such contracts are called menu-contracts. I show when the employer can obtain strictly higher expected payoffs by offering menu-contracts than by offering the restricted contracts used in the literature. The final model studies the ability of a bidder in an auction to organize collusion among her rival bidders and the resulting impact of this collusion on the seller. Bidders valuations are private information. I show that in a two bidder, discrete, independent private-value auction, the seller earns less when a bidder can offer her rival a collusion proposal than in the absence of collusion. This contrasts with a cele- brated result by Che and Kim ("Robustly collusion-proof implementation". Econometrica, 74(4):1063-1107, July 2006) stating that for such auctions there is a mechanism that eliminates all the effects of collusion. Che and Kim and much of the literature assume an uninformed third-party organizes collusion.
