Author: Tracy R. Lewis Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We examine optimal dynamic incentive contracts when adverse selection and moral hazard problems are present. We find that early success is optimally penalized in the sense that the agent who succeeds early subsequently faces a lower- powered incentive contract. Penalizing success in this manner serves to limit the agent's initial incentive to understate his ability.
Author: PETER O. CHRISTENSEN; GERALD A. FELTHAM; CHRISTIAN. Publisher: ISBN: 9781638280859 Category : BUSINESS & ECONOMICS Languages : en Pages : 0
Book Description
Timeliness, Accuracy, and Relevance in Dynamic Incentive Contracts examines managerial performance measures from the perspective of timeliness, accuracy, and relevance in multi-period incentive problems. The authors use a simple linear framework where managerial actions do not affect risk and compare and contrast consumption risk for a manager's preferences with single and multiple consumption dates, respectively.Both full commitment to and renegotiation of long-term contracts are considered. Under full commitment, timely and accurate information is usually relevant and desirable; the only differences arise from the modeling of managerial preferences, through the manager's consumption risk. In particular, the timeliness of performance reports can be irrelevant; then, delaying reports is desirable if it can increase their accuracy. Under renegotiation of long-term contracts, the timeliness of information release relative to renegotiation is essential. Any information released prior to renegotiation is incorporated into an ex post efficient (renegotiated) contract and is particularly useful in insuring the manager against future consumption risk. Delayed reporting destroys this insurance value and can make late reports irrelevant, independent of the modeling of managerial preferences. But timely reports can create ex ante inefficient action incentives for managers, and then accuracy can be costly as well.
Author: Boyan Jovanovic Publisher: ISBN: Category : Contracts Languages : en Pages : 0
Book Description
We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed and when the effort and noise affect output additively. We then analytically solve for the optimal contract when the agent has exponential utility. We find that the Pareto frontier shifts out as information about the agent's quality improves. In the standard spot-market setup, by contrast, when the parameter measures the agent's 'quality', the Pareto frontier shifts inwards with better information. Commitment is therefore more valuable when quality is known more precisely. Incentives then are easier to provide because the agent has less room to manipulate the beliefs of the principal. Moreover, in contrast to results under one-period commitment, wage volatility declines as experience accumulates.
Author: Julien Prat Publisher: ISBN: Category : Languages : en Pages : 49
Book Description
We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed and when the effort and noise affect output additively. We then analytically solve for the optimal contract when the agent has exponential utility. We find that the Pareto frontier shifts out as information about the agent's quality improves. In the standard spot-market setup, by contrast, when the parameter measures the agent's 'quality', the Pareto frontier shifts inwards with better information. Commitment is therefore more valuable when quality is known more precisely. Incentives then are easier to provide because the agent has less room to manipulate the beliefs of the principal. Moreover, in contrast to results under one-period commitment, wage volatility declines as experience accumulates.
Author: Anthony Heyes Publisher: Edward Elgar Publishing ISBN: 9781843762935 Category : Law Languages : en Pages : 432
Book Description
. . . their collection together here represents a valuable addition to the library of those who are concerned with studying, teaching analysing, practicing, or making, environmental law as well as students and practitioners of environmental economics. David Hadley, The Economic Journal The exploration of the basic economics of externalities and the basic common law doctrines and institutions for dealing with externalities constitute a "first generation" of economic analysis of environmental law. The present book of essays illustrates the "second generation" of economic analysis of environmental law. The fundamental economic issues, and the common law, are no longer the focus. The lessons of the "first generation" have been absorbed and transcended. The focus has shifted to the level of application, which is the level at which the economist and the lawyer-economist can best hope to influence policy. We are making progress and the essays in this volume will do much to assure that progress continues. From the foreword by Richard A. Posner, United States Court of Appeals for the Seventh Circuit and University of Chicago Law School, US One of the most exciting and productive areas of research in environmental policy is resulting from the integration of the traditionally separate fields of environmental economics and law and economics. This book brings together the top researchers engaged in this enterprise to share the useful insights that are emerging. Both in terms of the scope of coverage and the depth of analysis this is an absolutely first-rate book. Tom Tietenberg, Colby College, Maine, US This outstanding book focuses on how economics can contribute to the design, implementation and appraisal of legal systems that create the right incentives for environmental protection. The sixteen original and specially commissioned contributions written by some of the leading names in their field span many of the important areas of contemporary interest and employ case study material combined with theoretical, empirical and experimental research. The book addresses many topical issues including: the fundamental notions of property rights and social norms; the design and implementation of civil liability regimes; the use of criminal law as an instrument of environmental policy; the role that citizen suits, self-monitoring and self-enforcement could and should play in the implementation of law; the international harmonisation of environmental law; and the treatment of environmental damages in courts. Cutting-edge economic technique is motivated by, and articulates with, real and pressing policy debates. The contributors refer to a range of legal cases and policy decisions, and draw out a host of policy implications and prescriptions for settings as diverse as Superfund reform in the US and the harmonisation of landfill regulations in the European Union. By combining incisive overviews of the latest thinking and results, complemented by original analysis, The Law and Economics of the Environment will appeal to researchers and students of the environment, law and economics, policy practitioners and those with an interest in knowing what constitutes good environmental law.
Author: Tracy R. Lewis
Author: Carsten Sebastian Pfeil
Author: PETER O. CHRISTENSEN; GERALD A. FELTHAM; CHRISTIAN.
Author: Gaudet, Gérard
Author: Boyan Jovanovic
Author: Julien Prat
Author: Gérard Gaudet
Author: Edward Baer Roberts
Author: Anthony Heyes
Author: