Speaker: Balazs Szentes (LSE)
Theme: " nitoring Design " joint with George Georgiadis.
Venue: Shabolovka st., 26, room 3211
Abstract: This paper considers a Principal–Agent model with hidden action in which the Principal can monitor the Agent by acquiring independent signals conditional on effort at a constant marginal cost. The Principal aims to implement a target effort level at minimal cost. The main result of the paper is that the optimal information-acquisition strategy is a two-threshold policy and, consequently, the equilibrium contract specifies two possible wages for the Agent. This result provides a rationale for the frequently observed single-bonus wage contracts.
Everyone interested is welcome to attend!Pass can be ordered by:
contact: Zheleznov Slava