Please use this identifier to cite or link to this item:
https://hdl.handle.net/10419/59661
Full metadata record
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Szydlowski, Martin | en |
dc.date.accessioned | 2012-02-02 | - |
dc.date.accessioned | 2012-07-12T12:34:01Z | - |
dc.date.available | 2012-07-12T12:34:01Z | - |
dc.date.issued | 2012 | - |
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 |
dc.language.iso | eng | en |
dc.publisher | |aNorthwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science |cEvanston, IL | en |
dc.relation.ispartofseries | |aDiscussion Paper |x1543 | en |
dc.subject.jel | D82 | en |
dc.subject.jel | D86 | en |
dc.subject.jel | M52 | en |
dc.subject.ddc | 330 | en |
dc.subject.keyword | dynamic contract | en |
dc.subject.keyword | principal-agent model | en |
dc.subject.keyword | ambiguity aversion | en |
dc.subject.keyword | continuous time | en |
dc.title | Ambiguity in dynamic contracts | - |
dc.type | Working Paper | en |
dc.identifier.ppn | 684638681 | en |
dc.rights | http://www.econstor.eu/dspace/Nutzungsbedingungen | en |
dc.identifier.repec | RePEc:nwu:cmsems:1543 | en |
Files in This Item:
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.