We characterize the optimal incentive scheme for a manager who faces costly e¤ort decisions and whose ability to generate pro…ts for the …rm varies stochastically over time. The optimal contract is obtained as the solution to a dynamic mechanism design problem with hidden actions and persistent shocks to the agent’s productivity. When the agent is risk-neutral, the optimal contract can often be...

An important result in convex analysis is the duality between a closed convex set and its support function. We exploit this duality to develop a novel geometric approach to mechanism design. For a general class of social choice problems we characterize the feasible set, which is closed and convex, and its support function. We next provide a geometric interpretation of incentive compatibility an...

One of the most fundamental problems in mechanism design is that of designing the auction that gives the optimal profit to the auctioneer. For the case that the probability distributions on the valuations of the bidders are known and independent, Myerson [15] reduces the problem to that of maximizing the common welfare by considering the virtual valuations in place of the bidders’ actual valuat...

Principals seek to enter a productive relationship with agents by posting general incentive contracts. A contract is exclusive and must solve both the ex post moral hazard and the ex ante competitive search problem (participation). Menus of contracts do not help hence (single) contract posting is optimal. Principal competition restores some bargaining power with the agents, to whom principals m...

We analyze how inequity aversion interacts with incentive provision in an otherwise standard moral hazard model with two risk averse agents. We find that behindness aversion (suffering only when being worse off) among agents unambiguously increases agency costs of providing incentives. This holds true if agents also suffer from being better off unless they account for effort costs in their comp...

We characterize the efficiency space of deterministic, dominant-strategy incentive compatible, individually rational and Pareto-optimal combinatorial auctions in a model with two players and k nonidentical items. We examine a model with multidimensional types, private values and quasilinear preferences for the players with one relaxation: one of the players is subject to a publicly known budget...

Widely distributed mobile vehicles wherein various sensing devices and wireless communication interfaces are installed bring vehicular participatory sensing into practice. However, the heterogeneity of vehicles in terms of sensing capability and mobility, and the participants' expectations on the incentives blackmake the collection of comprehensive sensing data a challenging task. A sensing dat...

Based on the H-M model, optimal incentive model under competition was constructed, best system constructed by solving and its characteristics are analyzed. theory of econometrics, an empirical correlation significance between main core variables intensity empirically tested. The results show that has a significant effect positive level. Incentive level non-linear with service cost risk preferen...

We study online combinatorial auctions with production costs proposed by Blum et al. [4] using the online primal dual framework. In this model, buyers arrive online, and the seller can produce multiple copies of each item subject to a nondecreasing marginal cost per copy. The goal is to allocate items to maximize social welfare less total production cost. For arbitrary (strictly convex and diff...

This paper derives optimal incentive contracts for agents with other-regarding preferences. It offers a behavioral explanation for the empirically observed lack of relative performance evaluation. We analyze a principal-multi agent model and assume that agents are inequity averse or status seeking. We show that team contracts can be optimal even if the agents’ performance measures are positivel...