Payoff Implications of Incentive Contracting

Daniel Garrett

No 20-1140, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: In the context of a canonical agency model, we study the payo implications of introducing optimally-structured incentives. We do so from the perspective of an analyst who does not know the agent's preferences for responding to incentives, but does knowthat the principal knows them. We provide, in particular, tight bounds on the principal's expected benet from optimal incentive contracting across feasible values of the agent's expected rents. We thus show how economically relevant predictions can be made robustly given ignorance of a key primitive.

Keywords: asymmetric information; mechanism design; robustness; procurement (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2020-09-07
New Economics Papers: this item is included in nep-cta, nep-des, nep-hrm and nep-mic
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Working Paper: Payoff Implications of Incentive Contracting (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:124664

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