An extensive academic literature exists on the optimal compensation of top executives. A less-developed literature pertains to the optimal compensation of middle management personnel. The goal of this paper is to address that concern. The setup we use is that of a firm s president (the...

We propose a version of Townsend’s [17] model of costly audits where the agents’ types are correlated. Audits are used because agents have a limited ability to bear risk so that the Full Surplus Extraction (FSE) scheme á la Crémer and McLean [5,6] and McAfee and Reny [13] are suboptimal....

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(Sous la direction de Michel Poitevin) Impartition et sous-traitance apparaissent souvent comme des synonymes : pourtant, les deux termes recoupent des réalités distinctes. La sous-traitance renvoie aux modalités - économiques ou légales - de toute forme de délégation. L'impartition...

We propose a valuation model for a bank which faces a bankruptcy risk. Banks are identified with a possibly infinite random sequence of net benefits. A bank is solvent as long as its benefits remain non-negative. To preserve distressed banks from destruction, banks will be pooled within a...

I consider the problem of the design of an optimal self-selecting contract scheme for a principal who is buying a good from an agent which has the opportunity of making a cost-reducing unobservable investment prior to the contracting stage. Because of a hold-up problem, the agent will randomizes...

This paper provides an analysis of screening contracts in a complete but imperfect information environment as opposed to the usual incomplete information (Bayesian) environment. An agent faces a hold-up situation while making a cost-reducing specific investment that is not observed by the...