We generalize the disutility of effort function in the linear-Constant Absolute Risk Aversion (CARA) puremoral hazardmodel.We assume that agents are heterogeneous in ability. Each agent's ability is observable and treated as a parameter that indexes the disutility of effort associated with the...

The theory of incentives and matching theory can complement each other. In particular, matching theory can be a tool for analyzing optimal incentive contracts within a general equilibrium framework. We propose several models that study the endogenous payoffs of principals and agents as a...

We propose a model based on competitive markets in order to analyse an economy with several principals and agents. We model the principal-agent economy as a two-sided matching game and characterise the set of stable outcomes of this principal-agent matching market. A simple mechanism to...

This article studies how delay in contracting depends on an exogenous signal. The agent whose cost is his private information may produce in the first period or be delayed until the second period. A signal about the cost of the agent is available between the two periods. The quality of the good...

Limited observability is the assumption that economic agents can only observe a finite amount of information. Given this constraint, contracts among agents are necessarily finite and incomplete in comparison to the ideal complete contract that we model as infinite in detail. We consider the...

I study the role the agent's wealth plays in the principal-agent matching with moral hazard and limited liability. I consider wealth and talent as the agent's type, and size as the firm's (principal's) type. Because utility is not perfectly transferable in this setup, I use generalized...

Vulnerability to manipulation is a threat to successful matching market design. However, some manipulation is often inevitable and the mechanism designer wants to compare manipulable mechanisms and pick the best. Real-life examples include reforms in the entry-level medical labor market in the...

We consider the problem of a principal who wishes to contract with a privately informed agent and is not able to commit to not renegotiating any mechanism. That is, we allow the principal, after observing the outcome of a mechanism to renegotiate the resulting contract without cost by proposing...