Penalizing Success in Dynamic Incentive Contracts
Download or Read eBook Penalizing Success in Dynamic Incentive Contracts PDF written by Tracy R. Lewis and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle.
Author | : Tracy R. Lewis |
Publisher | : |
Total Pages | : 0 |
Release | : 2008 |
ISBN-10 | : OCLC:1376546009 |
ISBN-13 | : |
Rating | : 4/5 (09 Downloads) |
Book Synopsis Penalizing Success in Dynamic Incentive Contracts by : Tracy R. Lewis
Book excerpt: We examine optimal dynamic incentive contracts when adverse selection and moral hazard problems are present. We find that early success is optimally penalized in the sense that the agent who succeeds early subsequently faces a lower- powered incentive contract. Penalizing success in this manner serves to limit the agent's initial incentive to understate his ability.