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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...
Persistent link: https://www.econbiz.de/10011140964
This paper considers incentives for information acquisition ahead of conflicts. First, we characterize the (unique …
Persistent link: https://www.econbiz.de/10008543767
Should contract design induce an agent to conduct a precontractual investigation even though, in any case, the agent will become fully informed after the signing of the contract? This paper shows that imperfect investigations might be encouraged. The result stands in contrast to previous...
Persistent link: https://www.econbiz.de/10010700800
necessities of signalling are shown to generate very strong investment incentives. These incentives are based on the desire not to …
Persistent link: https://www.econbiz.de/10005785933
In this paper, I compare two different approaches to model implicit contracting, the infinite-horizon approach typically used in the literature and afinite-horizon approach building on an adverse-selection model. I demonstrate that even the most convincing result of the infinite-horizon...
Persistent link: https://www.econbiz.de/10005785797
Who does, and who should initiate costly certification by a third party under asymmetric quality information, the buyer or the seller? Our answer — the seller — follows from a non–trivial analysis revealing a clear intuition. Buyer–induced certification acts as an...
Persistent link: https://www.econbiz.de/10008568612
providing incentives for information acquisition and truthful information revelation. …
Persistent link: https://www.econbiz.de/10008633330
Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004The existing literature on the comparison of tournaments and piece rates as alternative incentive schemes has focused on the case of unlimited liability. However, in practice real workers’ wealth is typically...
Persistent link: https://www.econbiz.de/10005785900
A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature about the first trade-off. Due to lack of...
Persistent link: https://www.econbiz.de/10005835229
We empirically investigate if tournaments between heterogeneous contestants are less intense. To test our hypotheses we use professional sports data from the TOYOTA Handball-Bundesliga, the major handball league in Germany. Using either differences in betting odds or rankings to measure ability...
Persistent link: https://www.econbiz.de/10008490450