Breakthroughs, Deadlines, and Self-Reported Progress: Contracting for Multistage Projects

• 成果类型: Article
• 署名作者: Green, Brett; Taylor, Curtis R.
• 署名单位: University of California System; University of California Berkeley; Duke University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20151181
• 发表日期: 2016
• 页码: 3660-3699
• 关键词: repeated moral hazard; limited-liability; time; AGENCY; DESIGN; games

摘要

We study the optimal incentive scheme fora multistage project in which the agent privately observes intermediate progress. The optimal contract involves a soft deadline wherein the principal guarantees funding up to a certain date if the agent reports progress at that date, then the principal gives him a relatively short hard deadline to complete the project-if progress is not reported at that date, then a probationary phase begins in which the project is randomly terminated at a constant rate until progress is reported. We explore several variants of the model with implications for optimal project design. In particular, we show that the principal benefits by imposing a small cost on the agent for submitting a progress report or by making the first stage of the project somewhat harder than the second.