Countervailing incentives in agency problems

Lewis, Tracy R.; Sappington, David E. M.

doi:10.1016/0022-0531(89)90083-5

Cited by 342 publications

(191 citation statements)

References 6 publications

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“…7 Assumption 1 also holds in models with countervailing incentives in which the agent's reservation utility profile is concave (cf. Maggi and Rodriguez-Clare [14], who extend Lewis and Sappington [12,13], and Feenstra and Lewis [4]). …”

Section: Assumptionsmentioning

confidence: 94%

“…13 For the casex ∈ (x, x), an additional argument is needed to ensure that point-wise maximization does not violate the monotonicity constraint by inducing a downward discontinuity atx. Using (1) and (24), we have…”

Section: The Firstmentioning

confidence: 99%

“…Thus, φ 0 is the optimal type assignment. Solving the 13 In addition, it is clear that assuming only σ xx < 0 (only β xx < 0) suffices to obtain Lemma 6 for the casê…”

Section: Lemma 7 Let Assumption 2 Hold Then a Type Assignment ψ Isx-mentioning

confidence: 99%

See 2 more Smart Citations

Optimal Bunching without Optimal Control

Nöldeke

Samuelson

2005

SSRN Journal

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Section: Assumptionsmentioning

confidence: 94%

Section: The Firstmentioning

confidence: 99%

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Optimal Bunching without Optimal Control

Nöldeke

Samuelson

2005

SSRN Journal

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“…The last term in (8) αµ(ρ − θ H )(q 2 L −q 2 H ) rises with α, and this positive effect is maximized, because of the most favored market shares, q 2 LL = q 2 HH = 1, given the continuation values, v 2 LH = v 2 HH = u under z(α). 28 When α rises, however, the payoff of firm 1 (u) falls. The positive effect through the last term is minimized for firm 1, because of the least favored market shares, q 1 LL = q 1 HH = 0, and the continuation-value reward…”

Section: Contractual Rangementioning

confidence: 99%

“…faced only by an informed party, as seen in Lewis and Sappington (1989), Spiegel and Spulber (1997) and others. 7 Continuation values in our paper play the role of side-payments in a legalized cartel.…”

Section: Introductionmentioning

confidence: 99%

Optimal collusion with internal contracting

Lee

2010

Games and Economic Behavior

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In this paper, we develop a model of collusion in which two firms play an infinitelyrepeated Bertrand game when each firm has a privately-informed agent. The colluding firms, fixing prices, allocate market shares based on the agent's information as to cost types. We emphasize that the presence of privately-informed agents may provide firms with a strategic opportunity to exploit an interaction between internal contracting and market-sharing arrangement: the contracts with agents may be used to induce firms' truthful communication in their collusion, and collusive market-share allocation may act to reduce the agents' information rents.Journal of Literature Classification numbers: C73, L13, L14.

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Optimal risk sharing with ex post private information: Rules versus discretion

Dai

2022

Southern Economic Journal

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We consider the optimal contract under cost uncertainty between a risk averse buyer and a risk averse supplier when the supplier can privately discover more cost information after contracting but before production. We show that the optimal contract is often characterized by distortions and rules which restrict the supplier from adjusting the production schedule to the cost realization. The supplier is often constrained by strict rules in high cost states, but enjoys more discretion to adjust the production schedule in low cost states. Moreover, the supplier is granted with more discretion when the buyer becomes more risk averse, but is restricted by more rules when the supplier becomes more risk averse or when the supplier's risk preference becomes private information.

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Countervailing incentives in agency problems

Cited by 342 publications

References 6 publications

Optimal Bunching without Optimal Control

Optimal Bunching without Optimal Control

Optimal collusion with internal contracting

Optimal risk sharing with ex post private information: Rules versus discretion

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