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Optimal Interventions in Markets with Adverse Selection

Philippon, Thomas; Skreta, Vasiliki - C.E.P.R. Discussion Papers - 2010

We study interventions to restore efficient lending and investment when financial markets fail because of adverse selection. We solve a design problem where the decision to participate in a program offered by the government can be a signal for private information. We charac terize optimal...

Persistent link: https://www.econbiz.de/10008468692

Bonus Culture: Competitive Pay, Screening, and Multitasking

Bénabou, Roland; Tirole, Jean - C.E.P.R. Discussion Papers - 2013

compensation. The model combines multitasking and screening, embedded into a Hotelling-like framework. Competition for the most …

Persistent link: https://www.econbiz.de/10011083769

Contractual Execution, Strategic Incompleteness and Venture Capital

Dessí, Roberta - C.E.P.R. Discussion Papers - 2009

Contractual execution generates hard information, available to the contracting parties, even when contracts are secretly executed. Building on this simple observation, the paper shows that incomplete contracts can be preferred to complete contracts. This is because (i) execution of incomplete...

Persistent link: https://www.econbiz.de/10004976792

Venture Capital and Knowledge Transfer

Dessí, Roberta; Yin, Nina - C.E.P.R. Discussion Papers - 2015

This paper explores a new role for venture capitalists, as knowledge intermediaries. A venture capital investor can communicate valuable knowledge to an entrepreneur, facilitating innovation. The venture capitalist can also communicate the entrepreneur's innovative knowledge to other portfolio...

Persistent link: https://www.econbiz.de/10011168896

Delegation and Dynamic Incentives

Shin, Dongsoo; Strausz, Roland - C.E.P.R. Discussion Papers - 2014

Using an agency model, we show how delegation, by generating additional private information, improves dynamic incentives under limited commitment. It circumvents ratchet effects and facilitates the revelation of persistent private information through two effects: a play-hardball effect, which...

Persistent link: https://www.econbiz.de/10011083436

Do Sellers Offer Menus of Contracts to Separate Buyer Types? An Experimental Test of Adverse Selection Theory

Hoppe, Eva I; Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2013

hypothesis of incentive theory is that the seller may want to offer a menu of contracts to separate the buyer types. In the good …

Persistent link: https://www.econbiz.de/10011083588

Public goods and the hold-up problem under asymmetric information

Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2012

An agent can make an observable but non-contractible investment. A principal then offers to collaborate with the agent to provide a public good. Private information of the agent about his valuation may either decrease or increase his investment incentives, depending on whether he learns his type...

Persistent link: https://www.econbiz.de/10011084108

Credence Goods, Costly Diagnosis, and Subjective Evaluation

Bester, Helmut; Dahm, Matthias - C.E.P.R. Discussion Papers - 2014

We study contracting between a consumer and an expert. The expert can invest in diagnosis to obtain a noisy signal about whether a low-cost service is sufficient or whether a high-cost treatment is required to solve the consumer’s problem. This involves moral hazard because diagnosis effort...

Persistent link: https://www.econbiz.de/10011084241

Innovation, Spillovers and Venture Capital Contracts

Dessí, Roberta - C.E.P.R. Discussion Papers - 2012

Innovative start-ups and venture capitalists are highly clustered, benefiting from localized spillovers: Silicon Valley is perhaps the best example. There is also substantial geographical variation in venture capital contracts: California contracts are more 'incomplete'. This paper explores the...

Persistent link: https://www.econbiz.de/10011084393

Contracting under Incomplete Information and Social Preferences: An Experimental Study

Hoppe, Eva I; Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2013

cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights … are reflected by the behavior of subjects in the laboratory and to what extent deviations from standard theory can be … agency theory is indeed useful to qualitatively predict how variations in the degree of uncertainty affect subjects' behavior …

Persistent link: https://www.econbiz.de/10011084433