We investigate a team production problem where two parties sequentially invest to generate a joint surplus. In this framework, it is possible to implement the first best even if the investment return is highly uncertain. The optimal contract entails a basic dichotomy: it is a simple option...

The article studies an adverse selection model in which a contractible, imperfect signal on the agent's type is revealed ex post. The agent is wealth constrained, which implies that the maximum penalty depends on the contracted transaction (e.g., the volume of trade). First, we show that the...

I study a simple principal agent screening model where the agent's type determines hispayoff as well as his preferences over activity levels. The agent's activity inflicts a payoffexternality on the principal, and she proposes a revelation mechanism to the agent.When the agent needs the...