Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/59661 
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dc.contributor.authorSzydlowski, Martinen
dc.date.accessioned2012-02-02-
dc.date.accessioned2012-07-12T12:34:01Z-
dc.date.available2012-07-12T12:34:01Z-
dc.date.issued2012-
dc.identifier.urihttp://hdl.handle.net/10419/59661-
dc.description.abstractI 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
dc.language.isoengen
dc.publisher|aNorthwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science |cEvanston, ILen
dc.relation.ispartofseries|aDiscussion Paper |x1543en
dc.subject.jelD82en
dc.subject.jelD86en
dc.subject.jelM52en
dc.subject.ddc330en
dc.subject.keyworddynamic contracten
dc.subject.keywordprincipal-agent modelen
dc.subject.keywordambiguity aversionen
dc.subject.keywordcontinuous timeen
dc.titleAmbiguity in dynamic contracts-
dc.typeWorking Paperen
dc.identifier.ppn684638681en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:nwu:cmsems:1543en

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