Optimal Contracts in a Dynamic Costly State Verification Model PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Optimal Contracts in a Dynamic Costly State Verification Model PDF full book. Access full book title Optimal Contracts in a Dynamic Costly State Verification Model by Cyril Monnet. Download full books in PDF and EPUB format.
Author: Cyril Monnet Publisher: ISBN: Category : Languages : en Pages : 45
Book Description
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.
Author: Cyril Monnet Publisher: ISBN: Category : Languages : en Pages : 45
Book Description
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.
Author: Francesco Carli Publisher: ISBN: Category : Electronic dissertations Languages : en Pages : 143
Book Description
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.
Author: Daniel Lukui Jia Publisher: Springer Nature ISBN: 981154588X Category : Business & Economics Languages : en Pages : 286
Book Description
This book summarizes the evolution of modern macroeconomics (New Consensus Macroeconomics, NCM) and proposes a new approach to theoretical and empirical analysis, which is based on a recently developed dynamic stochastic general equilibrium (DSGE) model. Dynamic macroeconomic analysis in emerging market economies is challenging, and of growing importance in the global economy, where emerging markets are becoming more and more influential. Clearly, a deeper understanding of the inner workings of emerging economies, particularly with respect to their socioeconomic structure and the urbanization process, is needed. The book’s extends the NCM/DSGE model to better account for significant economic and social features in emerging market economies. In particular, household heterogeneities and social stratification are explicitly incorporated into the framework proposed here, substantially enhancing the comprehensiveness of the model economy, and allowing it to better account for underlying social structure in emerging economies. Furthermore, financial and housing markets have not been considered sufficiently in either the advanced or emerging economy literature, an oversight this book remedies. As such, it makes an original and valuable contribution to the field, and a direction for future research.
Author: Oliver Hart Publisher: Clarendon Press ISBN: 0191521728 Category : Business & Economics Languages : en Pages : 244
Book Description
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.
Author: Volodymyr Babich Publisher: Springer Nature ISBN: 3030757293 Category : Business & Economics Languages : en Pages : 304
Book Description
This book examines the challenges and opportunities arising from an assortment of technologies as they relate to Operations Management and Finance. The book contains primers on operations, finance, and their interface. After that, each section contains chapters in the categories of theory, applications, case studies, and teaching resources. These technologies and business models include Big Data and Analytics, Artificial Intelligence, Machine Learning, Blockchain, IoT, 3D printing, sharing platforms, crowdfunding, and crowdsourcing. The balance between theory, applications, and teaching materials make this book an interesting read for academics and practitioners in operations and finance who are curious about the role of new technologies. The book is an attractive choice for PhD-level courses and for self-study.
Author: Cyril Monnet
Author: Cyril Monnet
Author: Stefan Krasa
Author: Robert M. Townsend
Author: Robert M. Townsend
Author: Francesco Carli
Author: Andrea Attar
Author: Daniel Lukui Jia
Author: Oliver Hart
Author: Volodymyr Babich
Author: Joseph Farrell