Arbeitspapier
Optimal long-term contracting with learning
We introduce uncertainty into Holmstrom and Milgrom (1987) to study optimal long-term contracting with learning. In a dynamic relationship, the agent's shirking not only reduces current performance but also increases the agent's information rent due to the persistent belief manipulation effect. We characterize the optimal contract using the dynamic programming technique in which information rent is the unique state variable. In the optimal contract, the optimal effort is front-loaded and decreases stochastically over time. Furthermore, the optimal contract exhibits an option-like feature in that incentives increase after good performance. Implications about managerial incentives and asset management compensations are discussed.
- Sprache
-
Englisch
- Erschienen in
-
Series: Working Paper ; No. 2016-10
- Klassifikation
-
Wirtschaft
Economics of Contract: Theory
Personnel Management; Executives; Executive Compensation
- Thema
-
executive compensation
moral hazard
Bayesian learning
hidden information
belief manipulation
private savings
continuous time
stock options
- Ereignis
-
Geistige Schöpfung
- (wer)
-
He, Zhiguo
Wei, Bin
Yu, Jianfeng
Gao, Feng
- Ereignis
-
Veröffentlichung
- (wer)
-
Federal Reserve Bank of Atlanta
- (wo)
-
Atlanta, GA
- (wann)
-
2016
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- He, Zhiguo
- Wei, Bin
- Yu, Jianfeng
- Gao, Feng
- Federal Reserve Bank of Atlanta
Entstanden
- 2016
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