Frequent monitoring in dynamic contracts br

• 成果类型: Article
• 署名作者: Orlov, Dmitry
• 署名单位: University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2022.105550
• 发表日期: 2022
• 关键词: Repeatedmoralhazard; Dynamiccontracts; monitoring; COMMUNICATION; Performanceevaluations

摘要

Iconsider adynamic principal-agent model in which the agent does not observe the quality of his output and the principal chooses how much to monitor the agent. Monitoring improves production outcomes but can reduce the agent's incentive to work if it uncovers bad performance and lead stop unishing the agent. The optimal monitoring intensity is path dependent: anagent who performedpoorly in the pastis monitored less going forward to reduce the risk of early termination.Conversely,an agent who performed well is monitoredmore ash is accumulated promised compensation provides a buffer against bad monitoring outcomes and reduces the associated penalties by deferring the pay-for-performance risk to states of the world in which termination costs are low.