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Author : Joel S. Demski
Publisher :
ISBN 13 :
Total Pages : 58 pages
Book Rating : 4.:/5 (248 download)
Download or read book Optimal Incentive Contracts with Multiple Agents written by Joel S. Demski and published by . This book was released on 1983 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Qi Luo
Publisher :
ISBN 13 :
Total Pages : 17 pages
Book Rating : 4.:/5 (13 download)
Download or read book Multiagent Incentive Contracts written by Qi Luo and published by . This book was released on 2019 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: Incentive contracts with multiple agents is a classical decentralized decision-making problem with asymmetric information. Contract design aims to incentivize noncooperative agents to act in the principal's interest over a planning horizon. We extend the single-agent incentive contract to a multiagent setting with history-dependent terminal conditions. Our contributions include: (a) Finding sufficient conditions for the existence of optimal multiagent incentive contracts and conditions under which they form a unique Nash Equilibrium; (b) Showing that the optimal multiagent incentive contracts can be solved by a Hamilton-Jacobi-Bellman (HJB) equation with equilibrium constraints; (c) Proposing a backward iterative algorithm to solve the problem.
Author : Anjan V. Thakor
Publisher :
ISBN 13 :
Total Pages : 51 pages
Book Rating : 4.:/5 (129 download)
Download or read book Optimal Contracts When Agents Envy Each Other written by Anjan V. Thakor and published by . This book was released on 2005 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the characteristics of endogenously-determined optimal incentive contracts for agents who envy each other and work for a risk-neutral (non-envious) principal. Envy makes each agent care not only about absolute consumption but also about relative consumption. Incentive contracts in this setting display properties strikingly different from those associated with optimal contracts in standard principal-agent theory. We derive results that help explain some of the discrepancies between the predictions of principal-agent theory and the stylized facts about real-world contracts.
Author : Patrick Bolton
Publisher : MIT Press
ISBN 13 : 9780262025768
Total Pages : 746 pages
Book Rating : 4.0/5 (257 download)
Download or read book Contract Theory written by Patrick Bolton and published by MIT Press. This book was released on 2004-12-10 with total page 746 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive introduction to contract theory, emphasizing common themes and methodologies as well as applications in key areas. Despite the vast research literature on topics relating to contract theory, only a few of the field's core ideas are covered in microeconomics textbooks. This long-awaited book fills the need for a comprehensive textbook on contract theory suitable for use at the graduate and advanced undergraduate levels. It covers the areas of agency theory, information economics, and organization theory, highlighting common themes and methodologies and presenting the main ideas in an accessible way. It also presents many applications in all areas of economics, especially labor economics, industrial organization, and corporate finance. The book emphasizes applications rather than general theorems while providing self-contained, intuitive treatment of the simple models analyzed. In this way, it can also serve as a reference for researchers interested in building contract-theoretic models in applied contexts.The book covers all the major topics in contract theory taught in most graduate courses. It begins by discussing such basic ideas in incentive and information theory as screening, signaling, and moral hazard. Subsequent sections treat multilateral contracting with private information or hidden actions, covering auction theory, bilateral trade under private information, and the theory of the internal organization of firms; long-term contracts with private information or hidden actions; and incomplete contracts, the theory of ownership and control, and contracting with externalities. Each chapter ends with a guide to the relevant literature. Exercises appear in a separate chapter at the end of the book.
Author : Bengt Holmstrom
Publisher :
ISBN 13 :
Total Pages : 60 pages
Book Rating : 4.3/5 ( download)
Download or read book Multi Task Principal-agent Analyses written by Bengt Holmstrom and published by . This book was released on 1990 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Nabil I. Al-Najjar
Publisher :
ISBN 13 :
Total Pages : 23 pages
Book Rating : 4.:/5 (353 download)
Download or read book Incentive Contracts in Two-sided Moral Hazards with Multiple Agents written by Nabil I. Al-Najjar and published by . This book was released on 1995 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Björn Bartling
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Relative Performance Or Team Evaluation? Optimal Contracts for Other-Regarding Agents written by Björn Bartling and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper derives optimal incentive contracts for agents with other-regarding preferences. It offers a behavioral explanation for the empirically observed lack of relative performance evaluation. We analyze a principal-multi agent model and assume that agents are inequity averse or status seeking. We show that team contracts can be optimal even if the agents' performance measures are positively correlated such that relative performance evaluation would be optimal with purely self-interested agents and even though relative performance evaluation provides additional incentives to provide effort if agents have other-regarding preferences. Furthermore, optimal incentive contracts for other-regarding agents can be low-powered as compared to contracts for purely self-interested agents.
Author : Borys Grochulski
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Optimal Incentive Contracts with Job Destruction Risk written by Borys Grochulski and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the implications of job destruction risk for optimal incentives in a long-term contract with moral hazard. We extend the dynamic principal-agent model of Sannikov (2008) by adding an exogenous Poisson shock that makes the match between the firm and the agent permanently unproductive. In modeling job destruction as an exogenous Poisson shock, we follow the Diamond-Mortensen-Pissarides search-and-matching literature. The optimal contract shows how job destruction risk is shared between the rm and the agent. Arrival of the job-destruction shock is always bad news for the rm but can be good news for the agent. In particular, under weak conditions, the optimal contract has exactly two regions. If the agent's continuation value is below a threshold, the agent's continuation value experiences a negative jump upon arrival of the job-destruction shock. If the agent's value is above this threshold, however, the jump in the agent's continuation value is positive, i.e., the agent gets rewarded when the match becomes unproductive. This pattern of adjustment of the agent's value at job destruction allows the firm to reduce the costs of effort incentives while the match is productive. In particular, it allows the firm to adjust the drift of the agent's continuation value process so as to decrease the risk of reaching either of the two inefficient agent retirement points. Further, we study the sensitivity of the optimal contract to the arrival rate of job destruction.
Author : David S. Bizer
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Optimal Incentive Contracts When Agents Can Save, Borrow, and Default written by David S. Bizer and published by . This book was released on 1999 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The standard Principal-Agent (PA) model assumes that the principal can control the agent's consumption profile. In an intertemporal setting, however, Rogerson (1985a) shows that given the optimal PA contract, the agent has an unmet precautionary demand for savings. Thus the standard PA model is invalid if the agent has access to credit markets. In this paper we generalize the standard PA model to allow for saving and borrowing by the agent. We show that the impact of such access critically depends upon the treatment of default. If default is notpermitted, efficiency is strictly reduced by the introduction of credit markets, and the equilibrium level of borrowing or saving is indeterminate in the model. If default is allowed, however, the optimal contract depends upon the level of bankruptcy protection in the economy, which is described by a minimum level of wage income. We show that there is an optimal intermediate range of bankruptcy protection. Within this range, allowing default increases efficiency in the economy relative to the case of no default. Also, the model predicts specific levels of consumer debt, interest and default rates as function of the level of bankruptcy protection level.
Author : Florian Englmaier
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (66 download)
Download or read book Optimal Incentive Contracts Under Moral Hazard when the Agent is Free to Leave written by Florian Englmaier and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Yin Chi Tam
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Optimal Contracts with Fairness Concerns written by Yin Chi Tam and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In an organization, the principal may care about both efficiency and fairness. In this paper, we study the optimal contracts between a principal and multiple agents when the principal favors a more even expost wage distribution. We characterize the principal's fairness concern by a convex shading cost function and it is shown that the optimal contract is either a fixed wage contract or an incentive contract. Moreover, interior solution exists under certain conditions where the principal would provide both fixed and incentive contracts to agents. We also show that the optimal contracts tend to be more hybrid if the shading cost becomes more convex and the fraction of the incentive contract would decrease as the principal cares more about fairness.
Author : Kevin C. Murdock
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Intrinsic Motivation and Optimal Incentive Contracts written by Kevin C. Murdock and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: I study the role of intrinsic motivation on optimal incentive contracts. Agents engage in efforts to generate projects with both financial return and intrinsic value to the agent. In a neutral environment, where intrinsic motivation has no direct effect on the disutility of effort, static contracts are unaffected by intrinsic motivation. In contrast, the firm's profits from an implicit contract are increasing in the degree to which the agent is intrinsically motivated, showing that implicit contracts and intrinsic motivation are complements. The results are further extended to consider the role of multiple implicit contracts and product market strategy.
Author : Jacques Paul Lawarrée
Publisher :
ISBN 13 :
Total Pages : 418 pages
Book Rating : 4.:/5 (33 download)
Download or read book Incentive Contracts with Strategic Agents written by Jacques Paul Lawarrée and published by . This book was released on 1990 with total page 418 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Ernst-Ludwig von Thadden
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Incentives for Unaware Agents written by Ernst-Ludwig von Thadden and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper introduces the problem of unawareness into Principal-Agent theory and discusses optimal incentive contracts when the agent may be unaware of her action space. Depending on the agent's default behavior, it can be optimal for the principal to propose an incomplete contract (that keeps the agent unaware) or a complete contract. The key tradeoff is that of enlarging the agent's choice set versus adding costly incentive constraints. If agents differ in their unawareness, optimal contracts show a self-reinforcing pattern: if there are few unaware agents in the economy optimal contracts promote awareness, if unawareness is wide-spread optimal contracts shroud the contracting environment, thus keeping the agent unaware.
Author : Jaeyoung Sung
Publisher :
ISBN 13 :
Total Pages : 22 pages
Book Rating : 4.:/5 (129 download)
Download or read book Optimal Multi-Agent Performance Measures for Team Contracts written by Jaeyoung Sung and published by . This book was released on 2008 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present a continuous-time contracting model under moral hazard with many agents. The principal contracts many agents as a team, and they jointly produce correlated outcomes. We show the optimal contract for each agent is linear in outcomes of all other agents as well as his/her own. The structure of the optimal contract strikingly reveals that the optimal aggregate performance measure in general can be orthogonally decomposed into two statistics: one is a sufficient statistic, and the other a non-sufficient statistic. As a consequence, the optimal aggregate performance measure in general is not a sufficient statistic, except when the principal is risk neutral. We further discuss agents' optimal effort choices using a quot;quadratic-costquot; example, which also strikingly suggests that team contracts sometimes provide lower-powered effort incentives than individually separate contracts do.
Author : D. Mookherjee
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (848 download)
Download or read book Optimal Incentive Schemes with Many Agents written by D. Mookherjee and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Merle Ederhof
Publisher : Now Publishers Inc
ISBN 13 : 1601984545
Total Pages : 86 pages
Book Rating : 4.6/5 (19 download)
Download or read book Discretion in Managerial Bonus Pools written by Merle Ederhof and published by Now Publishers Inc. This book was released on 2011 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discretion in Managerial Bonus Pools synthesizes and integrates a growing literature that has emerged over the past 10-15 years on the use of both objective and subjective performance indicators in managerial incentive plans. The authors examine the structure of efficient bonus pools (fixed payment schemes) in the presence of subjective performance indicators. The analysis covers a range of scenarios including single- and multi-agent settings, the interplay of objective and subjective indicators and short-term as opposed to long-term contracting relations. To synthesize the existing research, the authors frame their exposition around five recurring themes which collectively speak to the structure and the efficiency of incentive schemes based on subjective information i. Value of Subjective Performance Indicators. ii. Incremental Agency Cost. iii.Compression of Optimal Incentive Contracts. iv. Optimality of Proper Bonus Pools. v. Value of Multiperiod Contracting
