ICEF Research Seminar by Balazs Szentes (LSE)

On Thursday, September 13 at 4.40 pm, room 3211 (Shabolovka str. 26) ICEF held the Research Seminar.
Speaker: Balazs Szentes (LSE)
Theme: "Optimal Monitoring 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.  

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ICEF seminars