Dynamic Nonmonetary Incentives • Job Talk

Speaker
Daniel Bird
Date
30/11/2015 - 12:30 - 11:00Add To Calendar 2015-11-30 11:00:00 2015-11-30 12:30:00 Dynamic Nonmonetary Incentives • Job Talk We consider a dynamic principal-agent environment in which investments and rewards (compensation opportunities) arrive stochastically over time, and are either taken immediately or foregone. The agent privately observes if an action is currently available, but he needs the principal's consent to take it. We show that there exists a unique optimal mechanism and analyze its qualitative properties. As the agent's promised compensation increases, the principal gradually becomes more selective about the incentivization of investments and less selective about the rewards that she allows. Interestingly, the unique optimal use of each reward turns out to be via "time allowances," that is, the principal allows the agent to enjoy all rewards that arrive before a certain point in time. Building 504, Room 011 אוניברסיטת בר-אילן - Department of Economics Economics.Dept@mail.biu.ac.il Asia/Jerusalem public
Place
Building 504, Room 011
Affiliation
Northwestern University
Abstract

We consider a dynamic principal-agent environment in which investments and rewards (compensation opportunities) arrive stochastically over time, and are either taken immediately or foregone. The agent privately observes if an action is currently available, but he needs the principal's consent to take it. We show that there exists a unique optimal mechanism and analyze its qualitative properties. As the agent's promised compensation increases, the principal gradually becomes more selective about the incentivization of investments and less selective about the rewards that she allows. Interestingly, the unique optimal use of each reward turns out to be via "time allowances," that is, the principal allows the agent to enjoy all rewards that arrive before a certain point in time.

Last Updated Date : 16/11/2015