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Discussion Papers, Kellogg School of Management, Northwestern University >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/59661
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| DC Field | | Value | | Language |
| dc.contributor.author | | Szydlowski, Martin | | en_US |
| dc.date.accessioned | | 2012-02-02 | | en_US |
| dc.date.accessioned | | 2012-07-12T12:34:01Z | | - |
| dc.date.available | | 2012-07-12T12:34:01Z | | - |
| dc.date.issued | | 2012 | | en_US |
| dc.identifier.uri | | http://hdl.handle.net/10419/59661 | | - |
| dc.description.abstract | | I study a dynamic principal agent model in which the effort cost of the agent is unknown to the principal. The 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 under-compensation region. Ambiguity also causes a disconnect between the current effort cost and the strength of incentives. That is, even when the agent is under-compensated, his incentives are as strong as in the over-compensation region, since the principal fears the agent might shirk otherwise. Under ambiguity, the agent's true effort cost does not need to equal the worst-case. analyze the agent's incentives for this case, and show that the possibility of firing is detrimental to the agent's incentives. I study several extensions concerning the timing structure and the nature of the principal's ambiguity aversion. | | en_US |
| dc.language.iso | | eng | | en_US |
| dc.publisher | | Northwestern Univ., Kellogg Graduate School of Management, Center for Mathematical Studies in Economics and Management Science Evanston | | en_US |
| dc.relation.ispartofseries | | Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1543 | | en_US |
| dc.subject.jel | | D82 | | en_US |
| dc.subject.jel | | D86 | | en_US |
| dc.subject.jel | | M52 | | en_US |
| dc.subject.ddc | | 330 | | en_US |
| dc.subject.keyword | | dynamic contract | | en_US |
| dc.subject.keyword | | principal-agent model | | en_US |
| dc.subject.keyword | | ambiguity aversion | | en_US |
| dc.subject.keyword | | continuous time | | en_US |
| dc.title | | Ambiguity in dynamic contracts | | en_US |
| dc.type | | Working Paper | | en_US |
| dc.identifier.ppn | | 684638681 | | en_US |
| dc.rights | | http://www.econstor.eu/dspace/Nutzungsbedingungen | | en_US |
| Appears in Collections: | | Discussion Papers, Kellogg School of Management, Northwestern University
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