Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/121347 
Year of Publication: 
2015
Series/Report no.: 
Center for Mathematical Economics Working Papers No. 544
Publisher: 
Bielefeld University, Center for Mathematical Economics (IMW), Bielefeld
Abstract: 
In this paper I analyze a dynamic moral hazard problem in teams with imperfect monitoring in continuous time. In the model, players are working together to achieve a breakthrough in a project while facing a deadline. The effort needed to achieve such a breakthrough is unknown but players have a common prior about its distribution. Each player is only able to observe their own effort, not the effort of others. I characterize the optimal effort path for general distributions of breakthrough efforts and show that, in addition to free-riding, procrastination arises. Furthermore, in this model, procrastination is not a result of irrational behavior and is even present in the welfare-maximizing solution.
Subjects: 
Procrastination
Moral hazard in teams
Public good provision
JEL: 
C72
C73
D81
D82
D83
H41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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