We consider an exchange economy in which agents possess private information at the time of engaging in state contingent contracts. While communication of private information is permitted, the true information state is not verifiable. The enforcement of contracts is, therefore, limited by incentive compatibility constraints. We formalize a notion of the core for such an economy. Our analysis can...

INTRODUCTION In England, in 2006, new dental contracts devolved commissioning of dental services locally to Primary Care Trusts to meet the needs of their local population. The new national General Dental Services contracts (nGDS) were based on payment for Units of Dental Activity (UDAs) awarded in three treatment bands based on complexity of care. Recently, contract currency in UK dentistry is...

We derive the optimal dynamic contract in a continuous-time principal-agent setting, in which both investors and the agent learn about the firm’s profitability over time. Because investors learn about the firm’s future profitability from current output, which also depends upon the agent’s actions, deviations by the agent distort investors’ beliefs. We characterize the optimal contract, and show...

=255223 (on file with the Columbia Law Review) (reviewing experimental evidence on fairness and reciprocity). 156. Scott & Stephan, Leviathan, supra note 143, at 102. 157. Id. 158. Fehr 8c Gächter, Fairness and Retaliation, supra note 143, at lbO-70. 159. Ernst Fehr 8c Simon Gächter, Do Incentive Contracts Undermine Voluntary Cooperation? 1 (Inst. for Empirical Research in Econ., Univ. of Zuric...

Incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined use of subjective and objective performance measures in (respectively) implicit and explicit incentive contracts. We show that the presence of sufficiently effective explicit contracts can render all implicit contracts inf...

In this paper we provide experimental evidence indicating that incentive contracts may undermine voluntary cooperation. This suggests that explicit incentives may have costly side effects that have been largely neglected by economists. In our experiments the undermining effect is so strong that the incentive contracts are less efficient than contracts without any incentives. Buyers, who are in ...

• We focus on the identification of spillovers in particular case regulation urban transportation firms with incentive contracts. build and estimate a structural cost model where service is regulated by local government provided large industrial corporation which operates several networks simultaneously. Diversity knowledge across operators same improves absorptive capacity increases flow spill...