Download or read book Incentive Contracts Optimal Penalties and Enforcement written by Joshua S. Gans and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper re-examines the literature on optimal penalties and the allocation of resources to enforcement from the viewpoint of incentive theory. It is assumed that an agent might perform a socially harmful act. In contrast to previous analyses, the agent might also perform profit-enhancing actions for the principal. The principal cannot distinguish between the good and harmful acts, but can set incentives based on observed profits. When the agent is wealth constrained, it is demonstrated that it is optimal to hold the principal liable for the agent's actions and to set the optimal penalty equal to expected harm caused. This is because the imposition of high penalty levels causes the principal to dilute incentives for the agent, resulting in a reduction in productivity. The same logic also means that it is optimal to devote some resources to enforcement and to impose penalties on both principal and agent if that is feasible.

Download or read book Incentive Contracts Optimal Penalties and Enforcement written by Joshua Gans and published by . This book was released on 1998 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Incentive Provision When Contracting is Costly written by Ola Kvaløy and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyse optimal incentive contracts in a model where the probability of court enforcement is determined by the costs spent on contracting. The analysis shows that there is no monotonic relationship between contracting costs and incentive intensity, and that an increase in contracting costs may lead to higher-powered incentives. Moreover, we formulate hypotheses about the relationship between legal systems and incentive provision. Specifically, the model predicts higher-powered incentives in common law than in civil law systems. We also find that better performance measures may induce lower investments in contracting, and potentially lead to lower-powered incentives.

Download or read book Incentive Provision when Contracting is Costly written by Ola Kvaløy and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Incentive Contracting with Ex Ante and Ex Post Moral Hazards written by Robert Puelz and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Predictions concerning structure and performance for managerial incentive contracts designed to prevent accidents are developed and tested. The model predicts a step-function penalty with more costly, more reliable audits used for higher loss reports to control ex post exaggeration of the loss. In addition, the penalty induces nonreporting that is imperfectly controlled through random audits. An empirical contract implemented to control workers' compensation medical losses provides evidence consistent with these predictions. The contract reduces both accident frequency and total losses, but increases reported loss severity as managers evade approximately 40 percent of the accident penalty by underreporting small losses.

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:

Download or read book Subjective performance measures in optimal incentive contracts written by George Baker and published by . This book was released on 1993 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Incentive Contracts in the Presence of Career Concerns written by Robert Gibbons and published by . This book was released on 1991 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies career concerns -- concerns about the effects of current performance on future compensation -- and describes how optimal incentive contracts are affected when career concerns are taken into account. Career concerns arise frequently: they occur whenever the market uses a worker's current output to update its belief about the worker's ability and competition then forces future wages (or wage contracts) to reflect these updated beliefs. Career concerns are stronger when a worker is further from retirement, because a longer prospective career increases the return to changing the market's belief. In the presence of career concerns, the optimal compensation contract optimizes total incentives -- the combination of the implicit incentives from career concerns and the explicit incentives from the compensation contract. Thus, the explicit incentives from the optimal compensation contract should be strongest when a worker is close to retirement. We find empirical support for this prediction in the relation between chief-executive compensation and stock-market performance.

Download or read book Optimal Penalties in Contracts written by Aaron S. Edlin and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contract law's liquidated damage rules prevent enforcement of contractual damage measures that require the promisor, if it breaches, to transfer to the promisee a sum that exceeds the net gain the promisee expected to make from performance; but these rules permit the promisor to transfer less than the promisee's expectation. We define a contractual damage multiplier as any number between zero and infinity by which the promisee's expected gain - its expectation interest - is multiplied. Multipliers of one or less thus comply with the liquidated damage rules while multipliers that exceed one do not; the high multipliers are unenforceable penalties. This paper shows that multipliers of any size can be efficient or inefficient, depending on the parties' purposes in creating them. For example, a multiplier that exceeds one will decrease welfare if used by a seller with market power to deter entry, but will increase welfare if used by parties to induce efficient relation specific investment. As a consequence, a court should inquire, not into the size of the multiplier, but into the purpose the multiplier serves for the parties. The practical implication of this view is that it no longer should be a sufficient defense to an action to enforce a contractual damage measure that the parties' multiplier exceeded one.

Download or read book Incentive Contracts with Imperfect Enforcement written by Katherine Elizabeth Dewhurst and published by . This book was released on 2003 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Managerial Incentive Contracts written by Jürgen K. Amendinger and published by . This book was released on 1992 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Incentive Contracts with Hidden Savings written by Archawa Paweenawat and published by . This book was released on 2009 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Incentive Contracting written by Joseph L. Midler and published by . This book was released on 1970 with total page 356 pages. Available in PDF, EPUB and Kindle. Book excerpt: Several versions of the negotiation of the parameters of incentive contracts between a government and private contractors are formulated as game theoretical models. This framework permits one focus upon a number of aspects that have previously been overlooked such as the interaction of the participants, the lack of domination by one side or the other, constraints upon the player's strategies, and the possible joint interests of the one party in the other player's outcome. Computational methods of solution are suggested. (Author).

Download or read book Optimal incentive contracts in the presence of career concerns written by Robert Gibbons and published by . This book was released on 1991 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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:

Download or read book Optimal Incentive Contracts For a Worker Who Envies His Boss written by and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Aversion to the Variability of Pay and Optimal Incentive Contracts written by Pierre Chaigneau and published by . This book was released on 2010 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: