Showing papers by "Venkataraman Bhaskar published in 2016"
TL;DR: This paper studied the efficiency of premarital investments when parents care about their child's marriage prospects, in a large frictionless marriage market with nontransferable utility, and found that, generically, investments exceed the Pareto-efficient level, unless the sexes are symmetric in all respects.
Abstract: We study the efficiency of premarital investments when parents care about their child’s marriage prospects, in a large frictionless marriage market with nontransferable utility. Stochastic returns to investment ensure that equilibrium is unique. We find that, generically, investments exceed the Pareto-efficient level, unless the sexes are symmetric in all respects. Girls will invest more than boys if their quality shocks are less variable than shocks for boys or if they are the abundant sex. The unique equilibrium in our continuum agent model is the limit of the equilibria of finite models, as the number of agents tends to infinity.
60 citations
TL;DR: In this paper, the authors study dynamic moral hazard with symmetric ex ante uncertainty about the difficulty of the job and show that the effort inducing contract must provide increasingly high powered incentives as the length of the relationship increases.
Abstract: We study dynamic moral hazard with symmetric ex ante uncertainty about the difficulty of the job. The principal and agent update their beliefs about the difficulty as they observe output. Effort is private and the principal can only offer spot contracts. The agent has an additional incentive to shirk beyond the disutility of effort when the principal induces effort: shirking results in the principal having incorrect beliefs. We show that the effort inducing contract must provide increasingly high powered incentives as the length of the relationship increases. Thus it is never optimal to always induce effort in very long relationships.
6 citations