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Imhof, Lorens; Kräkel, Matthias - 2013

performing agent must beat the second best to receive the winner prize. We analyze a tournament with two risk averse agents …

Persistent link: https://www.econbiz.de/10010198511

Optimal contracts with a risk-taking agent

Barron, Daniel; Georgiadis, George; Swinkels, Jeroen M. - In: Theoretical economics : TE ; an open access journal in … 15 (2020) 2, pp. 715-761

Consider an agent who can costlessly add mean-preserving noise to his output. To deter such risk-taking, the principal … optimally offers a contract that makes the agent's utility concave in output. If the agent is risk-neutral and protected by … limited liability, this concavity constraint binds and so linear contracts maximize profit. If the agent is risk averse, the …

Persistent link: https://www.econbiz.de/10012308620

Peer effects and incentives

Kräkel, Matthias - 2014

In a multi-agent setting, individuals often compare own performance with that of their peers. These comparisons influence agents incentives and lead to a noncooperative game, even if the agents have to complete independent tasks. I show that depending on the interplay of the peer effects, agents...

Persistent link: https://www.econbiz.de/10011430294

Empowerment and the dark side of delegation

Kräkel, Matthias - 2018

The existing delegation literature has focused on different preferences of principal and agent concerning project selection, which makes delegating authority costly for the principal. This paper shows that delegation has a cost even when the preferences of principal and agent are exogenously...

Persistent link: https://www.econbiz.de/10011795221

Incentives and Equilibrium in Agency with Adverse Selection

Faynzilberg, Peter S. - 2015

We show that contracting in agency with voluntary participation may involve incentives for the agent's abstention. Their provision alters the optimality criteria in the principal's decision-making, further distorts the mechanism, and may lead to breakdown of contracting in circumstances where...

Persistent link: https://www.econbiz.de/10013021575

What drives reciprocal behavior? : the optimal provision of incentives over the course of careers

Fahn, Matthias; Schade, Anne; Schüßler, Katharina - 2017

We explore how inherent preferences for reciprocity and repeated interaction interact in an optimal incentive system. Developing a theoretical model of a long-term employment relationship, we first show that reciprocal preferences are more important when an employee is close to retirement. At...

Persistent link: https://www.econbiz.de/10011718616

Hidden Action and Outcome Contractibility : An Experimental Test of Moral Hazard Theory

Hoppe, Eva I.; Schmitz, Patrick W. - 2019

negotiate contracts. In line with contract theory, the contractibility of the outcome plays a crucial role when effort is a …

Persistent link: https://www.econbiz.de/10014105234

Inefficiency and regulation in credence goods markets with altruistic experts

Farukh, Razi; Kerkhof, Anna; Loebbing, Jonas - 2020

, price regulation should be accompanied by licensing arrangements that cap the number of experts in the market. Our theory …

Persistent link: https://www.econbiz.de/10012431181

Tournaments with gaps

Imhof, Lorens; Kräkel, Matthias - In: Economics letters 122 (2014) 2, pp. 211-214

Persistent link: https://www.econbiz.de/10010395184

Dynamic contracting : an irrelevance theorem

Eső, Péter; Szentes, Balàzs - In: Theoretical economics : TE ; an open access journal in … 12 (2017) 1, pp. 109-139

This paper generalizes a conceptual insight in dynamic contracting with quasilin- ear payoffs: the principal does not need to pay any information rents for extract- ing the agent’s “new” private information obtained after signing the contract. This is shown in a general model in which the...

Persistent link: https://www.econbiz.de/10011704662