When is it best for the Principal to commit not to disclosing all what she knows in moral hazard interactions. I show that whenever the agent would choose the same action under complete information at several distinct states, then full transparency can generically be improved upon. This implies that full transparency is generically suboptimal whenever the dimension of the information held by th...

We consider a model of occupational choice in large economies where individuals differ in their wealth endowment. Individuals can remain self-employed or engage in productive matches with another individual, i.e., form firms. Matches are subject to a moral hazard problem with limited liability. The division of the gains from such matches is determined by competitive forces. When the incentive p...

Those statements are quite brave: they also imply that there has not been our own guilt in producing a human being with such a scarse empathy and so sharpened an egoistic drive. Because, if it would be our fault, it would be quite unusual to be solved by ourselves. Obviously, to think of any kind and procedure of moral „enhancement,“ means to have very clear ideas on the absolute superiority of...

Required reading: Chapter 6: Milgrom, Paul, and John Roberts, 1992, Economics, Organization and Management (PrenticeHall: London). Supplementary reading: *Sappington, David E. M., 1991, Incentives in principal-agent relationships, Journal of Economic Perspectives 5(2), 45-66. Chapter 4: Laffont, Jean-Jacques, and David Martimort, 2002, The Theory of Incentives: The Principal-Agent Model (Prince...

This paper analyses the impact of retailer overconfidence psychology on incentive contract for a manufacturer-retailer supply chain, where product quality is affected by the manufacturer and the retailer’s behaviors. There exists double-sided moral hazard in the supply chain. Using principal-agent model, this paper builds incentive contracts under symmetric and asymmetric information situations...