Calibrated Incentive Contracts

Sylvain Chassang

No 1316, Working Papers from Princeton University, Department of Economics, Econometric Research Program.

Abstract: This paper studies a dynamic agency problem which includes limited liability, moral hazard and adverse selection. The paper develops a robust approach to dynamic contracting based on calibrating the payoffs that would have been delivered by simple benchmark contracts that are attractive but infeasible, due to limited liability constraints. The resulting dynamic contracts are detail-free and satisfy robust performance bounds independently of the underlying process for returns, which need not be i.i.d. or even ergodic.

Keywords: dynamic; agency; problem (search for similar items in EconPapers)
JEL-codes: C01 D02 H30 (search for similar items in EconPapers)
Date: 2011-04
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Citations: View citations in EconPapers (2)

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Journal Article: Calibrated Incentive Contracts (2013)
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