Download or read book Optimal Contracts and Competitive Markets with Costly State Verification written by Robert M. Townsend and published by . This book was released on 1979 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Contracts with Costly State Verification written by Stefan Krasa and published by . This book was released on 1991 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Contracts in a Dynamic Costly State Verification Model written by Cyril Monnet and published by . This book was released on 2005 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper describes optimal contracts in a dynamic costly state verification model with stochastic monitoring. An agent operates a risky project on behalf of a principal over several periods. Each period, the principal can observe the revenues from the project provided he incurs a fixed cost. We show that an optimal contract exists with the property that, in each period and for every possible revenue announcement by the agent, either the principal claims the entire proceeds from the project or promises to claim nothing in the future. This structure of payments enables the principal to minimize audit costs over the duration of the project. Those optimal contracts are such that the agent's expected income rises with time. Moreover, except in at most one period, the principal claims the entire returns of the project whenever audit occurs. We also provide conditions under which all optimal contracts must satisfy these properties.
Download or read book Optimal Contracts and Competitive Markets with Costly State Verifications written by Robert M. Townsend and published by . This book was released on 1979 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Contracting with Costly State Verification with an Application to Crowdsourcing written by J. Aislinn Bohren and published by . This book was released on 2017 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: A firm employs workers to obtain costly unverifiable information for example, categorizing the content of images. Workers are monitored by comparing their messages. The optimal contract under limited liability exhibits three key features: (i) the monitoring technology depends crucially on the commitment power of the firm virtual monitoring, or monitoring with arbitrarily small probability, is optimal when the firm can commit to truthfully reveal messages from other workers, while monitoring with strictly positive probability is optimal when the firm can hide messages (partial commitment), (ii) bundling multiple tasks reduces worker rents and monitoring inefficiencies; and (iii) the optimal contract is approximately efficient under full but not partial commitment. We conclude with an application to crowdsourcing platforms, and characterize the optimal contract for tasks found on these platforms.
Download or read book Optimal Contracts when Enforcement is a Decision Variable written by Stefan Krasa and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Contracts Under Costly State Falsification written by Jeffrey Malcolm Lacker and published by . This book was released on 1988 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Costly State Verification and Optimal Investment written by Bappaditya Mukhopadhyay and published by . This book was released on 2002 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: We model a lender borrower relationship in a CSV framework. The project available with the firm is characterized by first order stochastic dominance. The lender audits the borrower to prevent the latter from strategic default. In this setup, we find that the optimal contract is the standard debt contract. However, a debt contract leads to overinvestment This result is in sharp contrast to those obtained in the literature. The key to these results is that the default probability of the project can be influenced by the nature of financial contract in place. The model also offers a possible explanation for differing debt equity ratios across economies that is consistent with the existing empirical findings.
Download or read book How Good are Standard Debt Contracts Stochastic Versus Nonstochastic Monitoring in a Costly State Verification Environment written by John H. Boyd and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate ex ante efficient contracts in an environment in which implementation is costless. In this environment, standard debt contracts will typically not be optimal. Optimal contracts may involve defaults, even in states in which the borrower is fully able to repay. We then examine the welfare costs of arbitrarily restricting the set of feasible contracts to standard debt contracts. When model parameters are calibrated to realistic values, the welfare loss from exogenously imposing this restriction is extremely small. Thus, if implementation costs are actually nontrivial (as seem likely), standard debt contracts will be (very close to) optimal.
Download or read book Hardball and the Soft Touch written by Eric Bond and published by . This book was released on 1993 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Costly State Verification and Debt Contracts written by Andrea Attar and published by . This book was released on 2002 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a critical review of the role of the Costly State Verification framework in financial contracting.
Download or read book Optimal Contracts with Enforcement Risk written by Nicola Gennaioli and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: I build a model of state verification by judges and study its consequences for contracting and welfare. I assume that judges have imperfect information about a state of nature and can use it selectively to implement their idiosyncratic/biased preferences. The interplay between judges' imperfect information and their idiosyncrasies creates enforcement risk. In a financial contracting model, absent judicial idiosyncrasies, the parties always write a contract contingent on the state of nature so as to exploit judges' information, imprecise as it may be. In contrast, judicial idiosyncrasies induce the parties to use non-contingent contracts so as to prevent biased judges from making very costly errors. Strong judicial idiosyncrasies encourage the use of rigid financial contracts tilting the allocation of control rights in favor of the investor. This leads to welfare losses. My results shed light on the empirical association between the law and financial development.
Download or read book Optimal Contracts with Lock in written by Joseph Farrell and published by . This book was released on 1987 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays in Dynamic Contracts with Costly State Verification and Limited Commitment written by Francesco Carli and published by . This book was released on 2013 with total page 143 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this dissertation I study optimal borrowing contracts in environments with credit markets imperfections and I explore how several institutions can influence the risk of strategic default. Specifically, in the first and in the second essays I study the efficient information production in credit relationships that are repeated over time, while in the third chapter I study the welfare consequences of different settlement arrangements. Information production in static loan contracts is well understood to be useful for resolving incentive problems and contemporaneously enforce contractual obligations: the value of information in a static costly state verification environment is linked to contemporaneous enforcement of the contractual obligations. In a dynamic environment instead, costly monitoring will survive the provision of dynamic incentives if the information produced by the verification process becomes in part independent of the value of monitoring in enforcing repayments. When the interaction between the lender and the borrower is repeated over time, the information about the position of the players in a particular node of the game tree has value to the lender because it allows to limit history dependence, "reset the clock" and avoid that the evolution of history take the game to a node where incentive-compatible continuation contracts entail punishments so severe to become self-defeating (termination). In the third essay I study a model of trading with limited commitment where collateral is used both to provide incentives and to provide insurance to risk averse traders. In economies with bilateral clearing, collateral (i) serves as insurance against counterparty default risk and (ii) guarantees that agents do not strategically default on their obligations. With central clearing, novation of financial contracts and diversification of counterparty default risk within the CCP strictly dominate collateral as an instrument for insurance. Nevertheless, when the CCP cannot observe the characteristics of its members and prices are not fully informative, the incentive problems associated with central clearing are more severe than those associated with bilateral clearing, leading to higher collateral requirements. Therefore, the desirability of Central Counter Party clearing depends on the resolution of this trade-off.
Download or read book Contract Design and Costly Verification Games written by Chongwoo Choe and published by . This book was released on 1995 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Market Participation Negotiation and Contract Specification written by Charles Evan Hyde and published by . This book was released on 1994 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Firms Contracts and Financial Structure written by Oliver Hart and published by Clarendon Press. This book was released on 1995-10-05 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a framework for thinking about economic instiutions such as firms. The basic idea is that institutions arise in situations where people write incomplete contracts and where the allocation of power or control is therefore important. Power and control are not standard concepts in economic theory. The book begins by pointing out that traditional approaches cannot explain on the one hand why all transactions do not take place in one huge firm and on the other hand why firms matter at all. An incomplete contracting or property rights approach is then developed. It is argued that this approach can throw light on the boundaries of firms and on the meaning of asset ownership. In the remainder of the book, incomplete contacting ideas are applied to understand firms' financial decisions, in particular, the nature of debt and equity (why equity has votes and creditors have foreclosure rights); the capital structure decisions of public companies; optimal bankruptcy procedure; and the allocation of voting rights across a company's shares. The book is written in a fairly non-technical style and includes many examples. It is aimed at advanced undergraduate and graduate students, academic and business economists, and lawyers as well as those with an interest in corporate finance, privatization and regulation, and transitional issues in Eastern Europe, the former Soviet Union, and China. Little background knowledge is required, since the concepts are developed as the book progresses and the existing literature is fully reviewed.
