A standard tournament contract specifies only tournament prizes. If agents' performance is measured on a cardinal scale …, the principal can complement the tournament contract by a gap which defines the minimum distance by which the best …

cost. The robust contract generates a seemingly excessive pay-performance sensitivity. The worst-case effort cost is high … contract is misspecified, i.e., when he is offered the robust contract, but his true effort cost is constant. I find that …

principal is ambiguity averse, and designs a contract which is robust to the worst case effort cost process. Ambiguity divides … the contract into two regions. After sufficiently high performance, the agent reaches the over-compensation region, where … he receives excessive benefits compared to the contract without ambiguity, while after low performance, he enters the …

optimal deterministic contract for almost any degree of loss aversion. The optimal stochastic contract pays a high wage …

incentives at the optimal contract can be captured using two state variables: the agent's continuation value and his information … rent. The optimal contract uses a combination of nonnegative payments and inefficient liquidation threat to provide the …