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7 votes

Lab experiments for a course in standard contract theory

There are a couple of papers by Hoppe-Schmitz in GEB that might be useful: Hoppe, E.I. and Schmitz, P.W., 2011. Can contracts solve the hold-up problem? Experimental evidence. Games and Economic ...
framue's user avatar
  • 71
5 votes

General mathematical model of incomplete contracts?

Just a model that can be used to state how (in)complete a particular contract is, whatever the reason. I remember a debate at the end of the 90's on Incomplete Contracts: Where do We Stand? by Jean ...
emeryville's user avatar
  • 6,975
5 votes

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

I'm not sure what exactly you're looking for, but here are some wild guesses: Bolton and Dewatripont (2005) Contract Theory, MIT Press. [Probably Chapters 5 and 6] Maskin and Tirole (1990) "The ...
Herr K.'s user avatar
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5 votes

Payoff from an option contract

When integrals look different than what pops into your head, often the reason is integration by parts. For your example note that $$\int_R^1 (\theta -R) g(\theta) d \theta + \int_R^1 G(\theta) d \...
Bayesian's user avatar
  • 5,291
4 votes
Accepted

Integrate a sufficient statistic

The fact that $$ \frac{g_{a_i}(y,a)}{g(y,a)}, $$ is the same for all $y$ for which $T_i(y) = T_i$ implies that the fraction can be written as a function of the value of $T_i(y)$ and $a$ alone. So ...
tdm's user avatar
  • 12.3k
4 votes
Accepted

Spence-Mirrlees Single Crossing Condition

Is it possible that you have a typo in the SMSC condition. I think it should be: $$ \frac{\partial}{\partial \theta} \left[-\frac{\partial u/\partial q}{\partial u/\partial p}\right] > 0. $$ If so, ...
tdm's user avatar
  • 12.3k
4 votes
Accepted

Principal-Agent Problem with Two Agents

While it's not explicitly mentioned in the question, it seems safe to assume that the manager gets to observe separately the outcome of each worker, i.e. the value of $v_i$ for $i=1,2$. If this is the ...
Herr K.'s user avatar
  • 15.4k
4 votes

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

Contracting with an informed principal is not so easy because the agent can learn about the principal's type from the kind of contract offered. This introduces signaling, which can quickly get messy. ...
Bayesian's user avatar
  • 5,291
3 votes

Where can I learn random matching models?

If you have in mind infinite populations I'd suggest Carlos Alós-Ferrer (1999) Dynamical Systems with a Continuum of Randomly Matched Agents, Journal of Economic Theory 86 (2), 245-267.
VARulle's user avatar
  • 6,964
3 votes
Accepted

Adding a non-binding constraint to the objective function

To illustrate what Tirole has done, let's consider a simpler environment. Consider a utility maximisation problem over two goods, $x$ and $y$. The consumer has utility function $u(x,y) = f(x) + y$, ...
Theoretical Economist's user avatar
3 votes

how can I find the original work on the bases of which 2016 nobel in economics was given?

It is based on multiple pieces of work, most of which can be found in the prize committee's thoroughly referenced announcement.
Giskard's user avatar
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3 votes

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

Holmström and Milgrom assume that the agent exhibits constant absolute risk aversion. This implies that if you change the total wage of the agent with a lump sum transfer (that does not depend on ...
brunosalcedo's user avatar
2 votes

Integrate a sufficient statistic

I add to the great answer of tdm some specifications about the term for almost all, because it is very important in mathematical analysis and in probability theory, and it is very likely to find it in ...
BakerStreet's user avatar
  • 3,887
2 votes

What kind of contractual problem is this?

In the above-mentioned quote, Oliver Hart is talking about a problem caused by incomplete contracts. Specifically, he is referring to the following paper: Hart, O., Shleifer, A. and Vishny, R.W. (...
mha1's user avatar
  • 21
2 votes

What kind of contractual problem is this?

This looks like a case of incomplete contracts, or what is sometimes known as non-contractibility. In the principal/agent paradigm, adverse selection arises when an informed agent transacts with an ...
Ubiquitous's user avatar
2 votes

Relation between incomplete contracting and the principal agent problem?

Not all principal-agent problems are the result of incomplete contracts, no. In fact, in most principal-agent problems, complete contracts are assumed. An incomplete contract is one that cannot be ...
NickCHK's user avatar
  • 636
1 vote

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

I haven't gone through all the papers so I just sampled 'The Firm as an Incentive System'. Browsing through it, it relies on Linear Algebra and Real Analysis. Again, I warn that I have not gone ...
Vedant Monger's user avatar
1 vote
Accepted

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

Since the authors state that the total labor input is: $$\int t_i(k)dk$$ the meaning of the total labor input in this case would be that it is the sum of all attention $t_i$ allocated over those tasks ...
1muflon1's user avatar
  • 56.9k
1 vote

Expected Utility and Jensen's Inequality

Didn't manage to get to a definitve answer in one shot, but it seems to me that Jensen inequality is not going to help much. Build up: You are essentially asking that \begin{equation} E_v \...
Konstantin's user avatar
1 vote
Accepted

Reservation utility

I suspect the $μ$ is introduced to account for the fact that no party can be forced to enter into a contract. Thus if we want to maximize the joint surplus that only works if both parties are willing ...
Maarten Punt's user avatar
  • 2,373

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