We explore the conditions under which the "first-order approach" (FO-approach) can be used to characterize profit maximizing contracts in dynamic principal-agent models. The FO-approach works when the resulting FO-optimal contract satisfies a particularly strong form of monotonicity in types, a...

This paper is a theoretical introduction to modern governance of universities in developing countries. Indeed, adopting the approach of the paradigm of the theory of incentives Laffont and Tirole (1993), this paper discusses the effects of the presence of information asymmetry between the State...

This article provides an overview of modern contract theory and discusses the implications of the theory for contracting for perennial dedicated energy crops. We discuss some of the unique challenges of contracting for dedicated energy crops used for the production of advanced biofuels and...

We examine a model of long-term contracting in which the buyer is privately informed about the stochastic process by which her value for a good evolves. In addition, the realized values are also private information. We characterize a class of environments in which the profit-maximizing long-term...

This paper considers an agency model in which the principal is privately informed of her production technology. In our model, the principal can require the agent to adopt the principal’s technology for production, or alternatively, to adopt a technology in the market. Information about the...

We analyze optimal contracts in a hierarchy consisting of a principal, a supervisor and an agent. The supervisor is either neutral or altruistic towards the agent, but his preferences are private information. In a model with two supervisor types, we find that the optimal contract may be very...

We consider a principal-agent setting in which a manager's compensation depends on a noisy performance signal, and the manager is granted the right to choose an (accounting) method to determine the value of the performance signal. We study the effect of the degree of such reporting discretion,...

We modelize and investigate the analytical rationale of employing bilateral mechanism design, which simplifies collective mechanism design by ignoring relative information evaluation, in generalized multi-agency contracting games under Bayesian Nash equilibrium. We permit interdependent...

Principal-agent models in which the agent has access to private information before a contract is signed are a cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights are reflected by the behavior of subjects in the...

I examine incentive contracting with an agent who disagrees with the principal and creates organizational frictions when the actual performance evaluation and compensation fall short of what he thinks he should earn. Results show that seemingly rigid policies, such as long-term performance...