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on Contract Theory and Applications |
| By: | Kvaløy, Ola (UiS Business School, University of Stavanger); Olsen, Trond E. (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | We analyze relational contracting between a principal and a team of agents where only aggregate output is observable. We deduce optimal team incentive contracts under di¤erent set of assumptions, and show that the principal can use team size and team composition as instruments in order to improve incentives. In particular, the principal can strengthen the agents' incentives by composing teams that utilize stochastic dependencies between the agents' outputs. We also show that more agents in the team may under certain conditions increase each team member's effort incentives, in particular if outputs are negatively correlated. |
| Keywords: | Relational contracts; team incentive scheme |
| JEL: | D00 D20 D21 D80 D86 |
| Date: | 2016–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2016_023&r=cta |
| By: | Julie Ing (ETH Zurich, Switzerland) |
| Abstract: | Governments design taxation schemes to capture resource rent. However, they usually propose contracts with limited duration and possess less information on the resources than the extractive firms do. This paper investigates how information asymmetry on costs and an inability to commit to long-term contracts affect tax revenue and the extraction path. This paper assumes that governments maximize the tax revenue contingent on the quantity extracted. This study gives several unconventional results. First, when information asymmetry exists, the inability to commit does not necessarily lower tax revenues. Second, under asymmetric information without commitment, an efficient firm may produce during the first period more or less than under symmetric information. Hence, the inability to commit has an ambiguous effect on optimal contract duration. Third, an increase in the discount factor may shift the extraction towards the first period which contradicts Hotelling's rule. |
| Keywords: | resource taxation, asymmetric information, commitment |
| JEL: | Q38 D86 H21 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:16-263&r=cta |
| By: | Charles M. Cameron; John M. de Figueiredo; David E. Lewis |
| Abstract: | We model personnel policies in public agencies, examining how wages and promotion standards can partially offset a fundamental contracting problem: the inability of public sector workers to contract on performance, and the inability of political masters to contract on forbearance from meddling. Despite the dual contracting problem, properly constructed personnel policies can encourage intrinsically motivated public sector employees to invest in expertise, seek promotion, remain in the public sector, and develop policy projects. However, doing so requires internal personnel policies that sort "slackers" from "zealots." Personnel policies that accomplish this task are quite different in agencies where acquired expertise has little value in the private sector, and agencies where acquired expertise commands a premium in the private sector. Finally, even with well-designed personnel policies, there remains an inescapable trade-off between political control and expertise acquisition. |
| JEL: | H11 J24 J45 K2 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22966&r=cta |
| By: | Zhijun Chen; Greg Shaffer |
| Abstract: | Contracts that reference rivals have long been a focus of antitrust law and the subject of intense scholarly debate. This paper compares two such contracts, exclusive-dealing contracts and market-share contracts, in a model of naked exclusion. We discuss the different mecha-nisms through which each works and identify the fundamental tradeoff that arises: market-share contracts are better at maximizing a seller’s benefit from foreclosure whereas exclusive dealing is better at minimizing a seller’s cost of foreclosure. We give settings in which each is the more profitable contract and show that welfare can be worse with market-share contracts. |
| Keywords: | Exclusive dealing, Market-share contracts, Dominant Firm, Foreclosure |
| JEL: | L13 L41 L42 K21 D86 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2016-44&r=cta |
| By: | Vasilev, Aleksandar |
| Abstract: | In this paper we investigate the quantitative importance of efficiency wages in explaining fluctuations in Bulgarian labor markets. This is done by augmenting an otherwise standard real business cycle model a la Long and Plosser (1983) with unobservable workers effort by employers and wage contracts as in Shapiro and Stiglitz (1984). This imperfection in labor markets introduces a strong propagation mechanism that allows the model to capture the business cycles in Bulgaria better than earlier models. The model performs well vis-a-vis data, especially along the labor market dimension, and in addition dominates the market-clearing labor market framework featured in the standard RBC model, e.g Vasilev (2009). |
| Keywords: | general equilibrium,shirking,efficiciency wages,unemployment |
| JEL: | E24 E32 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:148413&r=cta |
| By: | HIRATA, Daisuke; KASUYA, Yusuke |
| Abstract: | This paper studies stable and (one-sided) strategy-proof rules in many-to-one matching markets with contracts. Not assuming any kind of substitutes condition or the law of aggregate demand, we obtain the following results. First, the number of stable and strategy-proof rules is at most one. Second, the doctor-optimal stable rule, whenever it exists, is the unique candidate for a stable and strategy-proof rule. Third, a stable and strategy-proof rule, whenever it exists, is second-best optimal for doctor welfare, in that no individually rational and strategy-proof rule can dominate it. This last result is further generalized to non-wasteful and strategy-proof rules. Due to the weak assumptions, our analysis covers a broad range of markets, including cases where a (unique) stable and strategy-proof rule is not equal to the one induced by the cumulative offer process or the deferred acceptance algorithm. |
| Keywords: | matching with contracts, stability, strategy-proofness, uniqueness, efficiency, irrelevance of rejected contracts |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:hit:econdp:2016-13&r=cta |