We study a dynamic agency model where the agent privately observes the firm's cash flows that are subject to persistent shocks. We characterize the policy dynamics and implement the optimal contract by financial securities. Because bad performance distorts investors' beliefs downward, the agent...

We study optimal insurance contracts for an agent with Markovian private information. Our main results characterize the implications of constrained efficiency for long-run welfare and inequality. Under minimal technical conditions, there is Absolute Immiseration: in the long run, the agent's...

This supplement contains auxiliary technical results and proofs omitted from Bloedel, Krishna, and Leukhina (2025) (henceforth BKL) and its Supplemental Appendix (henceforth SA). First, Section I proves parts (a)–(c) and (e)–(f) of Theorem 3 from Appendix B.1 of BKL. (Part (d) of Theorem 3...

The incentives for an advisor first to diligently perform research and second to accurately report her results are investigated in a model of optimal contracting. To motivate the advisor to collect and analyze the relevant data, her compensation must include a contingent component that depends...

We study the optimal incentive scheme for a multistage project in which the agent privately observes intermediate progress. The optimal contract involves a "soft deadline" wherein the principal guarantees funding up to a certain date -- if the agent reports progress at that date, then the...