Equilibrium CEO contract with belief heterogeneity
نویسندگان
چکیده
Consider a firm owned by shareholders with heterogeneous beliefs and run manager who chooses random production plans. Shareholders do not observe the chosen plan but only its realization. The financial market consists of assets contingent on realizations. A contract for specifies her compensation as function firm’s possibly some restrictions to trade in market. are unrestricted. We define concept equilibrium between such that is unanimously preferred shareholders, markets clear has no incentive cheat. first analyze properties equilibria particular show should restrict from trading. next provide framework where exist. lastly study compensations when have can be ranked terms optimism towards plan. Specific attention given their departure linear compensations.
منابع مشابه
Belief-based equilibrium
We introduce a new solution concept for short-sighted players engaging in a repeated interaction: a Belief-based equilibrium (BBE). In a BBE, players optimize myopically given their beliefs which are not necessarily correct, but are not contradicted by the data. We show that, if the stage game has a unique correlated equilibrium then the play of a BBE resembles a Nash equilibrium play. However,...
متن کاملEquilibrium Wage-Tenure Contract with Unobserved Human Capital
This paper develops an equilibrium job search model in which the employed worker privately accumulates human capital and continually searches for a better paying job. The firm cannot observe the level of human capital of the worker nor the job search outcome. In order to induce truthful revelation on the level of human capital, the firm offers a menu of contracts with different lifetime values ...
متن کاملSkill Heterogeneity and Equilibrium Unemployment
Opportunities for skilled and unskilled workers in the UK diverged over the last quarter of the twentieth century. We develop an empirical framework consistent with these trends that highlights the importance of skill heterogeneity in both wage setting and labour demand in explaining aggregate labour market outcomes. The framework enables us to quantify the macroeconomic effects of shocks that ...
متن کاملThe Contract Year Phenomenon in the Corner Office: An Analysis of Firm Behavior During CEO Contract Renewals
This paper investigates how executive employment contracts influence corporate financial policies during the final year of the contract term. We find that the impending expiration of fixed-term employment contracts creates incentives for CEOs to engage in strategic window-dressing activities, including managing earnings aggressively and withholding negative firm news. At the same time, acquisit...
متن کاملBelief Heterogeneity, Collateral Constraint, and Asset Prices∗
The recent economic crisis highlights the role of financial markets in allowing economic agents, including prominent banks, to speculate on the future returns of different financial assets, such as mortgage-backed securities. This paper introduces a dynamic general equilibriummodel with aggregate shocks, endogeneously incomplete markets and heterogeneous agents to investigate this role of finan...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Economic Theory
سال: 2022
ISSN: ['1432-0479', '0938-2259']
DOI: https://doi.org/10.1007/s00199-022-01440-6