Download or read book Essays on Optimal Contracting written by Zhiguo He and published by . This book was released on 2008 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Optimal Contracting Under Asymmetric Information written by Aaron Miruri Thegeya and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Optimal Contracting Under Asymmetric Information written by Aaron Miruri Thegeya and published by . This book was released on 2010 with total page 438 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Economics of Information and Optimal Contracting written by Spyridon Terovitis and published by . This book was released on 2017 with total page 442 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book PhD series written by Mie la Cour Sonne and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Optimal Contracts with Overconfidence written by Justin R. Downs and published by . This book was released on 2020 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the effect of overconfidence on markets and organizations with asymmetric information. In the first chapter, I introduce overconfidence into a standard information gathering contracting model. A principal (she) hires an agent (he) to gather information about a project's cost before he implements the project, and the agent overestimates the probability of having a low implementation cost. The agent's overconfidence makes him more willing to sign the contract, but less willing to gather information, and increases in overconfidence may increase or decrease the principal's profit. In the second chapter, I study a labor market where firms hire overconfident workers who have private information about their productivity. I derive the optimal contracts for both a monopsonistic market, where one firm makes take-it-or-leave-it offers to the workers, as well as a competitive market, where many firms compete for the services of workers. Overconfidence causes the optimal contract to be distorted away from the efficient outcome in both markets, but a monopsonistic firm internalizes these distortions while a competitive firm does not. The main result is that monopsonistic markets can be more efficient than competitive markets. In the third chapter, I provide a review of several mathematical definitions of overconfidence used in the contract theory literature and apply them all to a generalized version of the information gathering model from Chapter 1. The effects overconfidence has on the agent's willingness to participate, to gather information, and on the principal's profit are all sensitive to the mathematical definition of overconfidence used in the model.

Download or read book Essays on Contract Theory written by Carlos Manuel Willington and published by . This book was released on 2003 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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.

Download or read book Essays in Two sided Markets and Optimal Contracting written by Mie la Cour Sonne and published by . This book was released on 2013 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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.

Download or read book Essays on Dynamic Contracting written by Ilia Krasikov and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The thesis focuses on understanding the dynamic nature of contracts used in various economic context, specifically financial economics and industrial organization. The first chapter "A Theory of Dynamic Contracting with Financial Constraints'' draws on a large empirical literature documenting that small businesses are financially constrained, and operate at an inefficient level. In the paper, we build a theoretical model where financial constraints arise endogenously as a product of interaction between persistent agency frictions and agent's inability to raise external capital.The paper makes two general points. First, efficiency is a certainty in the long run, and it is achieved through monotone slacking of financial constraints. Second, persistence makes the path towards efficiency much more constrained in comparison to the model with the iid technology. In particular, we show that dynamic agency models with persistence predict a larger cross section of firms in the economy to be financially constrained.At a technical level, we invoke the recursive approach of \citet{aps}, using a two-dimensional vector of promised utilities as a state variable. We show that the optimal contract always stays in a strict subset of the recursive domain termed the shell, and the optimal contract is monotone within this set. We also verify that the results continue to hold in continuous time.The second chapter "Dynamic Contracts with Unequal Discounting'' looks at dynamic screening with soft financial constraints. In contrast to the first paper, the agent can raise money but at a different rate than the principal.We solve for the optimal contract and show that efficiency is not attainable with soft financial constraints. Therefore, the predictions of dynamic models of mechanism design are not robust to the assumption of equal discounting. For the large set of parameters, the optimal contract has the restart property- dynamic distortions are a function of the number of consecutive bad shocks, and once the good shock arrives the process repeats again. We also show that restricting attention to contracts which have the restart property is in general approximately optimal. The endogenous resetting aspect of restart contracts shares features of various contracts used in practice.In the third chapter "On Dynamic Pricing'', we explore dynamic price discrimination, extending a canonical model of monopolistic screening to repeated sales, where a seller uses timing of purchases as a screening instrument. The importance of time as an instrument for price discrimination has been understood since Varian [1989].In the paper, we are aiming to provide a formal analysis of pricing strategies to discriminate amongst consumers based on the timing of information arrival and/or the timing of purchase.A seller repeatedly trades with a buyer. Buyer's valuations for the trade follow a renewal process; that is, they change infrequently at random dates. For the model with two periods, We show that selling the first period good for a spot price and selling the second period good by optioning a sequence of forwards is the optimal pricing strategy. Specifically, at the outset, the seller offers an American option which can be exercised in each of the two periods. Exercising the option grants the buyer with a forward- an obligation to purchase the second period good for a specific price, and a strike price- a right to buy (or not) the good in the second period after learning his value. The buyer with a high valuation exercises the option in the first period, whereas one with a low valuation waits until the second period and then takes a call.We extend the analysis to the general continuous time renewal processes and assess the performance of price discrimination based on American options on forwards:i.optioning forwards is shown to be the deterministic optimum for the sequential screening problem- when the seller makes a sale in a single fixed period;ii.optioning forwards is shown to be the exact optimum for the repeated sales problem in the restricted class of strongly monotone contracts- when allocative distortions are monotone in a whole vector of buyer's valuations;iii.the optimum for the repeated sales problem in the unrestricted class of contracts is shown to be backloaded and a theoretical bound is provided for the fraction of optimal revenue that can be extracted by optioning forwards.Finally, the construction of dynamic pricing mechanism and bounds is ported to study repeated auctions.

Download or read book Essays on Optimal Contracts and Renegotiation written by Susanne Ohlendorf and published by . This book was released on 2009 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Contract Theory written by Fei-Lung Tzang and published by . This book was released on 2008 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Contracts written by Zenan Wu and published by . This book was released on 2015 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two essays on contract theory. I investigate contracts under different economics contexts. In the first chapter, I consider a two-period model in which the success of the firm depends on the effort of a first-period manager (the incumbent) and the ability of a second-period manager. At the end of the first period, the board receives a noisy signal of the incumbent manager's ability and decides whether to retain or replace the incumbent manager. I show that the information technology the board has to assess the incumbent manager's ability is an important determinant of the optimal contract and replacement policy. The contract must balance providing incentives for the incumbent manager to exert effort and ensuring that the second-period manager is of high ability. I show that severance pay in the contract serves as a costly commitment device to induce effort. Unlike existing models, I identify conditions on the information structure under which both entrenchment and anti-entrenchment emerge in the optimal contract. In the second chapter, I use a dynamic model of life insurance with one-sided commitment and bequest-driven lapsation, as in Daily, Hendel and Lizzeri (2008) and Fang and Kung (2010), but with policyholders who may underestimate the probability of losing their bequest motive, to analyze how the life settlement market--the secondary market for life insurance--may affect consumer welfare in equilibrium. I show that life settlement may increase consumer welfare in equilibrium when (i) policyholders are sufficiently overconfident; and (ii) the intertemporal elasticity of substitution of consumption (IES) of policyholders is greater than one.

Download or read book Essays on Optimal Contract Design written by Jin Xu and published by . This book was released on 2013 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt: The optimal compensation contract is a very important issue for firms. Some empirical findings of wage structure in internal labor market are puzzling. For example, why are the compensation of workers more compressed than predicted by the classical theories. Why is the wage structure convex in hierarchical firms? This dissertation explores various important factors which may affect the optimal contract in the internal labor market. The first chapter characterizes the optimal contract when workers in the workplace care not only about theirown wage but alos their co-workers' wage. Specifically, I assume that workers are inequity averse model of Fehr and Schmidt (1999), I derive that the optimal wage structure is more compressed with inequity averse workers than with the standard workers. Inequity aversion among workers can also help explain the internal organization of the firms. For example, inequity aversion among workers may lead firms to employ only high productivity workers, even though the marginal product of a low productivity worker is higher than the worker's marginal cost. Chapter 2 examines two possibile realistic explanations for the convex wage structure in the hierarchical firms. Based on the multi-round tournament model of Rosen (1986), we incorporate heterogeneous stage effects. The first extension that can generate the convex wage structure is that the number of workers competing increases with the hierarchical levels. The second explanation is that the returns to effort increase with the hierarchical levels, which cannot generate the convex wage structure unless further assumptions added on optimal effort levels and cost functions. The third chapter investigates the underlying assumption in Chapter 1 that people are inequity averse to ex-ante payoff differentials. Specifically, an online survey is conducted to test whether ex ante or ex post fairness views affect people's decision making in a social context. I find that the ex post fairness views do make an important role in people's decision making. The results of the survey data do not support the model of inequity aversion.

Download or read book Essays in Dynamic Contracting written by Suehyun Kwon and published by . This book was released on 2012 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis examines three models of dynamic contracting. The first model is a model of dynamic moral hazard with partially persistent states, and the second model considers relational contracts when the states are partially persistent. The last model studies preference for delegation with learning. In the first chapter, the costly unobservable action of the agent produces a good outcome with some probability, and the probability of the good outcome corresponds to the state. The states are unobservable and follow an irreducible Markov chain with positive persistence. The chapter finds that an informational rent arises in this environment. The second best contract resembles a tenure system: the agent is paid nothing during the probationary period, and once he is paid, the principal never takes his outside option again. The second best contract becomes stationary after the agent is tenured. For discount factors close to one, the principal can approximate his first best payoff with review contracts. The second chapter studies relational contracts with partially persistent states, where the distribution of the state depends on the previous state. When the states are observable, the optimal contracts can be stationary, and the self-enforcement leads to the dynamic enforcement constraint as with i.i.d. states. The chapter then applies the results to study the implications for the markets where the principal and the agent can be matched with new partners. The third chapter studies preference for delegation when there is a possibility of learning before taking an action. The optimal action depends on the unobservable state. After the principal chooses the manager, one of the agents may receive a private signal about the world. The agent decides whether to disclose the signal to the manager, and the manager chooses an action. In an equilibrium, the agents' communication strategies depend on the manager's prior. The principal prefers a manager with some difference in prior belief to a manager with the same prior.

Download or read book Essays in Dynamic Contract Theory written by Rui Zhao and published by . This book was released on 2001 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: