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20.11. Micro Theory Seminar: Daniel Garrett

Micro Theory Seminar with Daniel Garrett (Toulouse School of Economics)

Event details
What
  • Micro Theory Seminar
When Nov 20, 2019
from 16:30 to 17:45
Where Faculty Room
Contact Name Frances Dilmé
Contact Email
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Topic

 Payoff Implications of Incentive Contracting

 
 
Abstract
 

 Financial incentives can induce effort and so enhance the surplus generated by agency relationships. An important question is often: who benefits from such incentives, especially how will​ the surplus from incentive contracting be divided between principal and agent? Answering this​ question is challenging in settings where information is scarce. This paper is aimed at answering the question in a canonical agency model from the perspective of an analyst who does not know​ the agent's preferences for responding to incentives, but does know that the principal knows them​ and will contract optimally. The paper provides tight bounds on the principal's expected benefit from optimal incentive contracting across feasible values of the agent's expected rents.

 
 

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