Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/59641
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dc.contributor.authorSzydlowski, Martinen_US
dc.date.accessioned2012-07-12T12:33:47Z-
dc.date.available2012-07-12T12:33:47Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/59641-
dc.description.abstractI study the optimal choice of investment projects in a continuous time moral hazard model with multitasking. While in the first best, projects are invariably chosen by the net present value (NPV) criterion, moral hazard introduces a cutoff for project execution which depends on both a project's NPV as well as it's signal to noise ratio (SN). The cutoff shifts dynamically depending on the past history of shocks, current firm size and the agent's continuation value. When the ratio of continuation value to firm size is large, investment projects are chosen more efficiently, and project choice will depend more on the NPV and less on the signal to noise ratio. The optimal contract can be implemented with an equity stake, bonus payments, as well as a personal account. Interestingly, when the contract features equity only, the project selection rule resembles a hurdle rate criterion.en_US
dc.language.isoengen_US
dc.publisher|aNorthwestern Univ., Kellogg Graduate School of Management, Center for Mathematical Studies in Economics and Management Science |cEvanstonen_US
dc.relation.ispartofseries|aDiscussion Paper, Center for Mathematical Studies in Economics and Management Science |x1525en_US
dc.subject.jelD86en_US
dc.subject.jelG11en_US
dc.subject.jelG31en_US
dc.subject.jelG32en_US
dc.subject.jelM12en_US
dc.subject.jelM52en_US
dc.subject.ddc330en_US
dc.subject.keywordContinuous-time contractingen_US
dc.subject.keywordProject Choiceen_US
dc.subject.keywordMultitaskingen_US
dc.subject.keywordBonus Paymentsen_US
dc.subject.keywordCEO Compensationen_US
dc.titleIncentives, project choice and dynamic multitaskingen_US
dc.typeWorking Paperen_US
dc.identifier.ppn657059609en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US

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