Optimal Incentive Contracts With Bonus Caps.
This article investigates contracts between two risk‐neutral parties with bounded bonus payments. If the available signal about the agent's behavior satisfies a novel condition, the monotone likelihood ratio transformation property, the optimal contract takes a simple form irrespective of whether th...
| Publicado en: | RAND Journal of Economics (Wiley-Blackwell) Vol. 56; no. 1; pp. 55 - 74 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Spring2025
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=183913524&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 183913524 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 07416261 56RJ jtl: RAND Journal of Economics (Wiley-Blackwell) issn: 07416261 maglogo: Y pubinfo: dt: Spring2025 vid: 56 iid: 1 pid: 480 pub: Wiley-Blackwell artinfo: ui: 183913524 10.1111/1756-2171.12491 ppf: 55 ppct: 19 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 728KB tig: atl: Optimal Incentive Contracts With Bonus Caps. aug: au: Chi, Chang Koo Olsen, Trond E. affil: School of Economics, Yonsei University, Seoul, South Korea Department of Business and Management Science, Norwegian School of Economics, Bergen, Norway su: Contracts Law enforcement Signals & signaling Payment sug: subj: Contracts Law enforcement Signals & signaling Police Protection Other Justice, Public Order, and Safety Activities Payment keyword: bonus caps incentive contracts informativeness criterion bonus caps incentive contracts informativeness criterion ab: This article investigates contracts between two risk‐neutral parties with bounded bonus payments. If the available signal about the agent's behavior satisfies a novel condition, the monotone likelihood ratio transformation property, the optimal contract takes a simple form irrespective of whether the first‐order approach (FOA) is valid or not. The contract rewards the agent the maximum bonus if the signal's likelihood ratio exceeds a threshold, which in contrast to the FOA contract is not necessarily zero. We next derive a condition for a signal to enhance the efficiency of a contract. Applications in relational contracting and law enforcement illustrate our findings. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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