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.
Download or read book The Theory of Incentives written by and published by . This book was released on 2002 with total page 421 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Unique implementation of incentive contracts with many agents written by Ching-to Ma and published by . This book was released on 1987 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Asymmetric Awareness and Moral Hazard written by Sarah Auster and published by . This book was released on 2011 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper introduces asymmetric awareness into the classical principal-agent model and discusses the optimal contract between a fully aware principal and an unaware agent. The principal enlarges the agent's awareness strategically when proposing the contract. He faces a trade off between participation and incentives. Leaving the agent unaware allows him to exploit the agent's incomplete understanding of the world. Making the agent aware enables the principal to use the revealed contingencies as signals about the agent's action choice. The optimal contract reveals contingencies that have low probability but are highly informative about the agent's effort.
Download or read book Competition and Incentives with Motivated Agents written by Timothy Besley and published by . This book was released on 2004 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Incentives for Motivated Agents Under an Administrative written by and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on Incentives for Effort Provision in Principal Agent Settings written by Troy A. Kravitz and published by . This book was released on 2013 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: Situations in which multiple parties with competing preferences interact are endemic throughout society. These essays consider the problem of a principal who seeks to induce self-interested agents to exert effort or promise contributions. The principal's task is to create an incentive structure that aligns the agents' preferences with his own. Chapter 1 considers a principal seeking to induce agents to exert costly, unobservable effort when the output they produce is unverifiable. The firm's solution is to hire multiple workers for some tasks and compare the output produced by the agents. The optimal mechanism bundles multiple tasks together to reduce the cost of monitoring and conditions wage payment for any task upon satisfactory completion of all tasks. The optimal mechanism is not efficient as the principal prefers greater duplication of tasks in exchange for reduced worker rents. Asymptotically, as jobs grow large, the firm approximates its first-best payoffs from the contractible effort benchmark. It is only in the limit that the optimal mechanism is also efficient. Chapter 2 studies the campaign finance landscape following recent changes to the law. A discriminatory all-pay contest model with a contribution cap is used to study legislative and lobbying behavior. The principal, a strategic lawmaker, is central to the analysis. The lawmaker both designs the prize the lobbyists are competing to obtain -- and, in doing so, determines their valuations for the prize -- and determines the terms of the prize's allocation. Contrary to existing work, expected contributions always increase as the contribution cap is relaxed. The effect on policy is more nuanced and depends on whether the cap is binding. The analysis highlights that a decrease in competitive forces, for example, from one lobbyist being richer or valuing the prize more, can be only partially offset by providing a discriminatory benefit to the other lobbyist. The strategic lawmaker endeavors to prevent such an imbalance from arising in the first place.
Download or read book Explicit and Implicit Incentives for Multiple Agents written by Jonathan C. Glover and published by . This book was released on 2014 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: This monograph presents existing and new research on three approaches to multiagent incentives: simpler mechanisms, robust mechanisms, and implicit contracts. The goal of all three approaches is to find theories that better explain observed institutions than the standard approach has.
Download or read book Incentive Contracts with Many Agents written by Ching-to Ma and published by . This book was released on 1987 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Incentive written by Fouad Sabry and published by One Billion Knowledgeable. This book was released on 2024-01-05 with total page 340 pages. Available in PDF, EPUB and Kindle. Book excerpt: What is Incentive In their broadest sense, incentives may be defined as anything that encourages a person to change their behavior in the direction that is intended. It is underlined that incentives are important by the fundamental law of economics and the rules of behavior, which suggest that bigger incentives equal to greater levels of effort and, as a result, higher levels of performance. This provides evidence that incentives are important. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Incentive Chapter 2: Motivation Chapter 3: Contract theory Chapter 4: Two-factor theory Chapter 5: Content theory Chapter 6: Personnel economics Chapter 7: Overjustification effect Chapter 8: Self-determination theory Chapter 9: Motivation crowding theory Chapter 10: Managerial psychology Chapter 11: Incentive program Chapter 12: Incentivisation Chapter 13: Cognitive evaluation theory Chapter 14: Warm-glow giving Chapter 15: Pay-for-Performance (Federal Government) Chapter 16: Work motivation Chapter 17: Employee motivation Chapter 18: Reward management Chapter 19: Uri Gneezy Chapter 20: Employee recognition Chapter 21: Motivation and employee engagement (II) Answering the public top questions about incentive. (III) Real world examples for the usage of incentive in many fields. Who this book is for Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of incentive.
Download or read book Optimal Incentives Without Expected Utility written by Victor H. Gonzalez Jimenez and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the optimal design of incentives when agents distort probabilities. We show that the type of probability distortion displayed by the agent and its degree determine whether an incentivecompatible contract can be implemented, the strength of the incentives included in the optimal contract, and the location of incentives on the output space. Our framework demonstrates that incorporating descriptively-valid theories of risk in a principal-agent setting leads to incentive contracts that are typically observed in practice such as salaries, lump-sum bonuses, and high-performance commissions.
Download or read book Game Theory in Management Accounting written by David Mueller and published by Springer. This book was released on 2017-09-21 with total page 453 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book demonstrates what kind of problems, originating in a management accounting setting, may be solved with game theoretic models. Game theory has experienced growing interest and numerous applications in the field of management accounting. The main focus traditionally has been on the field of non-cooperative behaviour, but the area of cooperative game theory has developed rapidly and has received increasing attention. Intensive research, in combination with the changing culture of publishing, has produced a nearly unmanageable number of publications in the areas concerned. Therefore, one main purpose of this volume is providing an intensive analysis of the intersection of these areas. In addition, the book strengthens the relationship between the theory and the practical applications and it illustrates the two-sided relationship between game theory and management accounting: new game theoretic models offer new fields of applications and these applications raise new questions for the theory.
Download or read book Incentives and Information in Multiagent Settings written by Omar Ahmed Nayeem and published by . This book was released on 2013 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation comprises three papers, each of which analyzes a mechanism design issue that arises in a setting with multiple agents that need to either acquire or aggregate information for use in a decision. The decision affects all agents as well as a principal, who also plays the role of mechanism designer. The theoretical models that I develop in these papers can be applied to a wide range of diverse settings, but I emphasize applications in the areas of organizational economics and political economics. The first paper, titled ``The Value of `Useless' Bosses, '' presents a novel view of the role of middle managers in organizations. Conventional wisdom regarding middle management suggests that a principal that can administer her organization independently has no reason to hire a manager, and that a principal that can benefit from a manager's services should hire one with aligned interests. The paper highlights a channel through which virtually any principal can benefit from the services of a manager, particularly of one whose interests differ. Specifically, when a principal relies on a worker to acquire information for an organizational decision, she can strengthen the worker's incentives by delegating the decision to a ``biased'' manager. Although casual observation of the game suggests that the manager's position is redundant, delegation benefits the principal. Thus, the paper helps to reconcile the prevalence of middle management with its widespread lamentation. It also illustrates how discord between a manager and a worker can improve an organization's performance. The results are consistent with outcomes from various knowledge-based organizations. The second paper, titled ``Communication and Preference (Mis)alignment in Organizations, '' conveys insights that are similar to the ones from ``The Value of `Useless' Bosses.'' Like the previous paper, this one explains the benefits of biased agents (both workers and managers) in organizations. However, unlike the previous paper, this one assumes that an organization's principal--whose time, technical expertise, and attention are limited--relies upon division managers to produce reports, which summarize information acquired by workers, to inform her decisions. Given this assumption, a pressing question for the principal is not whether to appoint a manager, but rather which type of manager to appoint. Note that two types of agency problems can arise in the setting described above. First, workers that bear private costs for their information acquisition efforts may not exert as much effort as the principal would like. Second, managers that do not share the principal's preferences over decisions can produce false reports. The paper shows that, although preference alignment within the organization may be expected to minimize the principal's losses from agency, the principal may benefit from intraorganizational conflict. In particular, the principal can use a manager's bias to strengthen a worker's incentives to acquire information. Since a manager's incentive to mislead the principal vanishes if the acquired information is of sufficiently high quality, the principal realizes an unambiguous welfare gain by hiring a biased manager. The principal can further enhance her welfare by also hiring a biased worker, whose bias clashes with the manager's. The third paper, titled ``Efficient Electorates, '' analyzes a social choice setting with pure common values, private noisy information about an unobservable payoff-relevant state of the world, and costless voting. In such a setting, an economic argument in favor of direct democracy is essentially one about information aggregation: if all citizens vote according to their private information--which, on average, is correct--then, in large majority-rule elections, the probability that the welfare-maximizing outcome is implemented is close to one. This argument, formalized first by the Marquis de Condorcet in his celebrated ``jury theorem'' and later extended to cover more general environments, is an asymptotic result that requires voters' information to be sufficiently uncorrelated. The paper shows that, for a fixed number of sincere voters with shared information sources, direct democracy is often suboptimal. It then considers the problem of appointing an optimal electorate given the allocation of information. In special cases of this framework, the problem can be viewed as the choice of an electorate from a set of individuals that communicate with each other via a social network before the election. It provides a characterization of the optimal electorate for certain classes of networks. Because the optimal electorate is often a proper subset of the full set of agents, representative democracy--even in the absence of voting costs--is often more efficient than direct democracy. As the paper illustrates through various examples, though, the solution to the problem of optimal elector appointment is unstable, and so a general characterization of the optimal electorate is elusive.
Download or read book Optimal Contracts with Non bayesian Agents written by and published by . This book was released on 2014 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates how the theoretical predictions of traditional economic models change when the assumption of Bayesian decision making is relaxed. Bayesian decision theory assumes that decision makers are able to perfectly describe their state space and assign a single prior to every possible event. The theory of unawareness relaxes the rst assumption by allowing decision makers to be aware of some contingencies and unaware of others. The theory of ambiguity relaxes the second assumption and allows decision makers to prefer known risks over unknown risks. The rst chapter of this thesis analyzes the e ect of ambiguity on bilateral trade in the presence of private information. It demonstrates that in an environment with adverse selection as in Akerlof's (1970) market for lemons, screening the informed party hedges against ambiguity. It further shows that the presence of ambiguity can be both bene cial or harmful for trade. If the adverse selection problem is su ciently severe, more ambiguity surprisingly leads to more trade and thereby increase surplus. Using these results, a nancial market application demonstrates that ambiguity may help to explain why some assets are optimally traded over-the-counter rather than on traditional exchanges, and suggests that opacity may be essential to sustain such trade. The second chapter of this thesis introduces asymmetric awareness into a classical principal-agent model with moral hazard, and shows how unawareness can give rise to incomplete contracts.1 The paper investigates the optimal contract between a fully aware principal and an unaware agent, where the principal can enlarge the agent's awareness strategically. When proposing the contract, the principal faces a tradeo between participation and incentives: leaving the agent unaware allows the principal to exploit the agent's incomplete understanding of the world, relaxing the participation constraint, while making the agent aware enables the principal to use the revealed contingencies as signals about the agent's action choice, relaxing the incentive constraint. The optimal contract reveals.
Download or read book Exploitation Aversion written by Jeffrey P. Carpenter and published by . This book was released on 2013 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical studies of the principal-agent relationship find that extrinsic incentives work in many instances, linking rewards to performance increases effort, but that they can also backfire, reducing effort. Intrinsic motivation, the internal drive to work to master a skill or to improve one's self image, is thought to be the key to whether incentives work or not. If the incentives crowd-out intrinsic motivation, and the effect is large enough, the net motivational effect on effort will be negative. We posit that an aversion to being exploited, i.e. being used instrumentally for the benefit of another, is one facet of intrinsic motivation, triggered by the combination of high-powered incentives and egoistic principal intent, that can cause incentives to fail. Using an experiment that provides the material circumstances necessary for exploitation to occur, we find that agent compliance is significantly lower for exploitative principals who use high-powered incentives and have a financial interest to do so, compared to neutral principals who use the same contracts but do not benefit from them. To corroborate our interpretation of the results we show that a surveyed "exploitation aversion" scale moderates this effect. Exploitation averse participants are less likely to comply with the incentives than exploitation tolerant participants when the principal signals an exploitative intent, but they are no less likely to comply with the same incentives when the principal is neutral. Our results have implications for the design and implementation of incentive structures within organizations.
Download or read book Incentives and Motivation in Agency Contracts written by Australian National University. Faculty of Economics and published by . This book was released on 2001 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Issues in General Economic Research and Application 2013 Edition written by and published by ScholarlyEditions. This book was released on 2013-05-01 with total page 1229 pages. Available in PDF, EPUB and Kindle. Book excerpt: Issues in General Economic Research and Application: 2013 Edition is a ScholarlyEditions™ book that delivers timely, authoritative, and comprehensive information about Theoretical Economics. The editors have built Issues in General Economic Research and Application: 2013 Edition on the vast information databases of ScholarlyNews.™ You can expect the information about Theoretical Economics in this book to be deeper than what you can access anywhere else, as well as consistently reliable, authoritative, informed, and relevant. The content of Issues in General Economic Research and Application: 2013 Edition has been produced by the world’s leading scientists, engineers, analysts, research institutions, and companies. All of the content is from peer-reviewed sources, and all of it is written, assembled, and edited by the editors at ScholarlyEditions™ and available exclusively from us. You now have a source you can cite with authority, confidence, and credibility. More information is available at http://www.ScholarlyEditions.com/.
