Dynamic contracts when agent's quality is unknown

Julien Prat and Boyan Jovanovic

We solve a long-term contracting problem with symmetric uncertainty about the agent's quality, and a hidden action of the agent. As information about quality accumulates, incentives become easier to provide because the agent has less room to manipulate the principal's beliefs. This result is opposite to that in the literature on "career concerns" in which incentives via short-term contracts become harder to provide as the agent's quality is revealed over time.

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Year of publication:	September 2014
Authors:	Prat, Julien ; Jovanovic, Boyan
Published in:	Theoretical economics : TE ; an open access journal in economic theory. - Toronto : [Verlag nicht ermittelbar], ISSN 1555-7561, ZDB-ID 2220447-7. - Vol. 9.2014, 3, p. 865-914
Subject:	Principal-agent model \| optimal contract \| learning \| private information \| reputation \| career \| Prinzipal-Agent-Theorie \| Agency theory \| Asymmetrische Information \| Asymmetric information \| Vertragstheorie \| Contract theory \| Moral Hazard \| Moral hazard \| Leistungsanreiz \| Performance incentive \| Vertrag \| Contract \| Reputation \| Spieltheorie \| Game theory \| Lernprozess \| Learning process

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Type of publication:	Article
Type of publication (narrower categories):	Aufsatz in Zeitschrift ; Article in journal
Language:	English
Other identifiers:	10.3982/TE1439 [DOI] hdl:10419/150239 [Handle]
Classification:	D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge ; E24 - Employment; Unemployment; Wages ; J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
Source:	ECONIS - Online Catalogue of the ZBW

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