A principal owns a firm, hires an agent of uncertain productivity, and designs a dynamic policy for evaluating his performance. The agent observes ongoing evaluations and decides when to quit. While not quitting, the agent is paid a wage proportional to his perceived productivity; the principal...

In this paper I examine the interrelation between monetary and non monetary incentive measures and the performance of a betting firm in the Czech Republic. Previous studies have focused either solely on monetary measures in order to examine the positive and adverse monetary incentive effects or...

Using nationally representative survey data for Finnish employees linked to register data on their wages and work histories we find wage effects of high involvement management (HIM) practices are generally positive and significant. However, employees with better wage and work histories are more...

We study optimal incentives in a principal-agent problem in which the agent's outside option is determined endogenously in a competitive labor market. In equilibrium, strong performance increases the agent's market value. When this value becomes sufficiently high, the threat of the agent's...

Can prices convey information about the fundamental value of an asset? This paper considers this problem in relation to the dynamic properties of the fundamental (whether it is constant or time-varying) and the structure of information available to agents. Risk-averse traders receive two...

The decision process of an investor who must screen information of varying quality in a stock market with heterogeneous investors leads to new dimensions to consider in the risk-return space. More volatile forecast errors make it more difficult to properly form expectations from forecasts....

The goal of this paper is to model an agent who dislikes large choice sets because of the "cost of thinking" involved in choosing from them. We take as a primitive a preference relation over lotteries of menus and impose novel axioms that allow us to separately identify the genuine preference...

In this paper, I propose a novel way to model sentiments in asset prices. Under this new representation, sentiments, or animal spirits, are sparked by exogenous shocks to beliefs, but feed on the uncertainty generated by imperfect information. Sentiments cause expectations to deviate from...

We build a workable game of common-property resource extraction under rational Bayesian learning about the renewal prospects of a resource. We uncover the impact of exogenously shifting the prior beliefs of each player on the response functions of others. What we find about the role of...