Author: Susanne OhlendorfPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
Essays on Optimal Contracts and Renegotiation
Author: Susanne OhlendorfEssays on Optimal Contracts with Overconfidence
Author: Justin R. DownsPublisher:
ISBN:
Category :
Languages : en
Pages : 102
Book Description
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.
Essays in Dynamic Contract Theory
Author: Rui ZhaoEssays on Contract Theory
Author: Alice Peng-Ju SuPublisher:
ISBN:
Category :
Languages : en
Pages : 87
Book Description
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.
Essays on International Trade Agreements and Contracts Under Renegotiation
Author: Kristina L. BuzardPublisher:
ISBN: 9781267418838
Category : Commercial policy
Languages : en
Pages : 106
Book Description
The first chapter of the dissertation addresses general issues in contracting with external enforcement. We study a contracting environment with specific investments in which renegotiation, and therefore hold-up, is possible. We show that taking account of the precise nature of trading and investment technologies is important for accurately determining the trading relationships in which efficient investment and trade will occur and that careful modeling of institutional detail and the information available to private parties and the external enforcement body (e.g. a court) are key. The second chapter presents a model of international trade agreements in which domestic policy-making power is shared between executive and legislative branches of government. Acknowledging the complexity of the legislative process as well as its susceptibility to lobbying reveals a political commitment role for trade agreements in that executives can use them to reduce incentives for lobbying so that the legislatures can better withstand political pressure. This helps explain the result from tests of the Grossman and Helpman (1994) model that there is too much protection relative to contributions given estimates of governments' social-welfare weights : I predict that contribution levels may in fact be low because tariffs have been raised to prevent political pressure and the increased risk of a trade disruption it engenders. The third chapter extends this model to a repeated-game framework, replacing the assumption of external enforcement with self-enforcing promises of future cooperation. Here, the inability of actors to make commitments affects the design of trade agreements in two ways: executives must not only take into account the legislatures' lobbying-driven propensity to revoke delegation and break the agreement, but also be robust to the executives' own incentives to renegotiate out of any punishment scheme. The design of the dispute resolution mechanism that makes the optimal punishment incentive compatible must balance two, often-conflicting, objectives: longer punishment periods help to enforce cooperation by increasing the costs of defecting from the agreement, but because the lobbies prefer the punishment outcome, this also incentivizes lobbying effort and with it the political pressure to break the agreement. Thus the model generates new predictions for the optimal design of mechanisms for resolving the disputes that arise in the course of trade-agreement relationships.
Essays on Contract Remedies, Incomplete Contracts, and Renegotiation
Author: Tai-yeong ChungEssays on Commitment, Renegotiation, and Incompleteness of Contracts
Author: Ilya R. SegalPublisher:
ISBN:
Category : Contracts
Languages : en
Pages : 216
Book Description
Essays on Relational Contracts
Author: Marina Cynthia HalacPublisher:
ISBN:
Category :
Languages : en
Pages : 322
Book Description
Essays on Financial Contracting
Author: Jukka VauhkonenPublisher:
ISBN:
Category : Bank investment contracts
Languages : en
Pages : 148
Book Description
Tiivistelmä.
Three Essays on Renegotiation in Games
Author: Andreas BlumePublisher:
ISBN:
Category : Game theory
Languages : en
Pages : 292
Book Description