主题：Simple Contracts under Observable and Hidden Actions

主讲人：陈波

时间：2017年10月10日13:30-15:00

地点：暨南大学中惠楼106B

主办方：暨南大学经济与社会研究院

主讲人简介：

Bo Chen received his BS in International Finance from Huazhong University of Science and Technology and his PhD in Economics from University of Wisconsin-Madison (2007). He was an Assistant Professor of Economics at Southern Methodist University (Dallas, TX) after his PhD and currently he is an Associate Professor of Economics at SMU. His research interests include repeated games, mechanism design and matching problems.

Abstract

We consider a general framework for multitask moral hazard problems with observable and hidden actions. Ideally, the principal in our framework can design optimal contracts that depend on both observable (and verifiable) actions and realized outcomes. Given a mild assumption on the existence of a punishment scheme, we identify a general equivalence result, dubbed the forcing principle,which states that every optimal contract in our framework is strategically equivalent to a simple forcing contract that is essentially outcome-contingent. The forcing contract only specifies an outcome-contingent reward scheme and an action profile, and the agent receives the outcome-contingent reward only if he follows the recommended observable actions (and is otherwise punished severely). The forcing principle has useful implications: It confers analytic advantage for the existence and computation of optimal contracts in our setting. It also highlights the importance of the existence of the punishment scheme in characterizing frrst-best benchmarks in moral hazard problems, which is typically ignored in the literature.