Journal ArticleDOI
Moral Hazard in Teams
TLDR
In this article, the authors study moral hazard with many agents and focus on two features that are novel in a multiagent setting: free riding and competition, and show that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally.Abstract:
This article studies moral hazard with many agents. The focus is on two features that are novel in a multiagent setting: free riding and competition. The free-rider problem implies a new role for the principal: administering incentive schemes that do not balance the budget. This new role is essential for controlling incentives and suggests that firms in which ownership and labor are partly separated will have an advantage over partnerships in which output is distributed among agents. A new characterization of informative (hence valuable) monitoring is derived and applied to analyze the value of relative performance evaluation. It is shown that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally. Competition per se is worthless. The role of aggregate measures in relative performance evaluation is also explored, and the implications for investment rules are discussed.read more
Citations
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Journal ArticleDOI
Impact of financial incentives on clinical autonomy and internal motivation in primary care: ethnographic study.
TL;DR: Investigation of financial incentives for quality of care introduced in the 2004 general practitioner contract did not seem to have damaged the internal motivation of the general practitioners studied, although more concern was expressed by nurses.
Journal ArticleDOI
Wintel: Cooperation and Conflict
TL;DR: In this article, the authors study competitive interactions between Intel and Microsoft, two producers of complementary products, and demonstrate that natural conflicts emerge over pricing, the timing of new product releases, and who captures the greatest value at different phases of product generations.
Journal ArticleDOI
Environmental policy design and dynamic nonpoint-source pollution
TL;DR: In this paper, the authors proposed an incentive scheme appropriate for a dynamic framework, which takes the form of charges per unit deviation between desired and observed pollutant accumulation paths, and these paths converge to the socially desirable ambient pollutant concentration.
Journal ArticleDOI
Contracting for Collaborative Services
TL;DR: This paper investigates how the choice of contract type---among fixed-fee, time-and-materials, and performance-based contracts---is driven by the service environment characteristics and identifies service process design changes that improve contract efficiency.
ReportDOI
Lab Labor: What Can Labor Economists Learn from the Lab?
Gary Charness,Peter Kuhn +1 more
TL;DR: In this article, the contributions of laboratory experiments to labor economics have been surveyed and a discussion of methodological issues: when (and why) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues?
References
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Posted Content
Production, information costs, and economic organization
Armen A. Alchian,Harold Demsetz +1 more
TL;DR: In this paper, the authors present a set of reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles, but full text can be found on the Internet Archive.
Journal ArticleDOI
Moral Hazard and Observability
TL;DR: In this article, the role of imperfect information in a principal-agent relationship subject to moral hazard is considered, and a necessary and sufficient condition for imperfect information to improve on contracts based on the payoff alone is derived.
Posted Content
The Economic Theory of Agency: The Principal's Problem.
TL;DR: The canonical agency problem can be posed as follows as discussed by the authors : the agent may choose an act, aCA, a feasible action space, and the random payoff from this act, w(a, 0), will depend on the random state of nature O(EQ the state space set), unknown to the agent when a is chosen.
Journal ArticleDOI
Reexamination of the perfectness concept for equilibrium points in extensive games
TL;DR: The concept of perfect equilibrium point has been introduced in order to exclude the possibility that disequilibrium behavior is prescribed on unreached subgames [Selten 1965 and 1973]. Unfortunately this definition of perfectness does not remove all difficulties which may arise with respect to unreached parts of the game.
Journal ArticleDOI
Good News and Bad News: Representation Theorems and Applications
TL;DR: In this article, a notion of "favorableness" of news is introduced, characterized, and applied to four simple models: the arrival of good news about a firm's prospects always causes its share price to rise, more favorable evidence about an agent's effort leads the principal to pay a larger bonus, buyers expect that any product information withheld by a salesman is unfavorable to his product, and bidders figure that low bids by their competitors signal a low value for the object being sold.