International College of Economics and Finance

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.  

ICEF seminars