Extending the First-Order Approach to Principal-Agent Problems

  • 6 Feb 2018

    12:30-14:15, Butler Room, Nuffield College

  • Economic Theory Lunchtime Workshop   Add to Calendar
Speaker: Ian Jewitt

Nuffield College

This event is part of the Economic Theory Lunchtime Workshop series

The paper addresses a classic unsolved question of information economics. How can a principal best motivate a limited-liability agent whose action she observes with N(0,σ) measurement error?  We characterise the solution for a wide class of cases. The solutions are easily computable. Some interesting comparative statics arise: for instance agents often work harder when there is moral hazard, than they would in the first-best. The methods generalise to families of distributions other than N(0,σ).

The Economic Theory Lunchtime Workshops are convened by Meg Meyer