# Questions tagged [contract-theory]

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### Why does a buyer-employment contract dominate a spot contract in this example (Bolton & Dewatripont 11.1.2.5, p497)

I'm working through Bolton and Dewatripont, Section 11.1.2, and have some questions about material in 11.2.5 on the bottom of page 497. I've tried to abbreviate the setup below, followed by my ...
26 views

### The most used probability distributions in moral hazard models?

I'm engaged in making a variation of the canonical moral hazard model, but I need some examples of probability distributions to make some simulations and graphs. What are the probability distributions ...
41 views

### In a Principal Agent Model how to demonstrate that the optimal contract is second best?

I am working with a Risk Averse Principal and Risk Neutral agent (Along the lines of the Mascolell, Whinston and Green Chapter 14 Problem Number 14.B.2). Since the Principal is risk averse so here the ...
39 views

### Where can I learn random matching models?

The title says all. I need papers or textbooks that explain in detail (step by step, maybe showing some canonical results) how I can model random matching games. Does anyone have a reference? Thank ...
39 views

### Strange screening game were FS contracts equals optimal contracts

Consider the setting where a principal hires an agent to do a project. Payoff from project is $\pi = \beta e$, where $\beta \in \{1,2\}$ is the degree of the agent's talent and $e \in [0, +\infty]$ is ...
40 views

### Signalling in a moral hazard contract with informed principals (that know their own type before contracting)

I was studying Laffont & Martimort textbook for a paper, but their section on moral hazard contract with informed principals assumes that the principal only knows his own type after contracting. ...
95 views

### Payoff from an option contract

In period 1 the consumer of type $\theta$ selects an option contract consisting of an up-front fee, $B>0$, and exercise price, $\bar{R}$. The consumer pays $B$ at the end of the first period. In ...
59 views

### Principal-Agent Problem with Two Agents

Consider the following principal-agent problem. You are a manager in charge of two workers, indexed with $i=1,2$. Each worker is asked to perform a particular task, and each can either work hard at ...
117 views

### Which mathematics are required for fully understanding the theories of the firm?

When I say "theories of the firm", I'm referring, in particular, to the theories exposed in the next works: 1) Transaction Cost Economics exposed in "Transaction Cost Economics" by ...
39 views

### What is the meaning of "labor input" in the context of incentive theories?

In the article "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design" (Holmström and Milgrom, 1991) it is said that two identical agents ($i=1,2$) devote ...
37 views

### Contract theory: Incentive contracts (when agents have multiple tasks) models by G. Baker and Holmstrom & Milgrom

So my question is the following: In both Baker's (2002) and H & M (1991) models we have a problem that a principal is trying to design a stimulating contract in such way that the agent will ...
138 views