Optimal Contracts for Research Agents

Yaping Shan ()
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Yaping Shan: School of Economics, University of Adelaide

No 2016-14, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: We study the agency problem between a firm and its research employees under several scenarios characterized by different R&D unit setups. In a multiagent dynamic contracting setting, we describe the precise pattern of the optimal contract. We illustrate that the optimal incentive regime is a function of how agents' efforts interact with one another; relative performance evaluation is used when their efforts are substitutes whereas joint performance evaluation is used when their efforts are complements. The optimal contract pattern provides a theoretical justification for the compensation policies used by firms that rely on R&D.

Keywords: Dynamic Contract; Repeated Moral Hazard; Multiagent Incentive; R&D; Employee Compensation (search for similar items in EconPapers)
JEL-codes: D23 D82 D86 J33 L22 O32 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-ino, nep-knm, nep-lma, nep-mic and nep-ppm
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Optimal contracts for research agents (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2016-14

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