In this paper I develop a model of political platform choice and subsequent policy implementation decisions by political candidates who are primarily motivated by career concerns. Although political platforms are non binding, politicians have some incentive to keep campaign promises in order to uphold their reputation. I analyze the electoral outcome and the determinants which influence the dec...

Dynamic Contracts and Learning by Doing This paper studies the design of optimal contracts in dynamic environments where agents learn by doing. We derive a condition under which contracts are fully incentive compatible. A closed-form solution is obtained when agents have CARA utility. It shows that human capital accumulation strengthens the power of incentives and allows the principal to provid...

This paper provides a general overview of the literature on the core of an exchange economy with asymmetric information. Incentive compatibility is emphasized in studying core concepts at the ex ante and interim stage. The analysis includes issues of non-emptiness of the core as well as core convergence to price equilibrium allocations. © 2002 Elsevier Science B.V. All rights reserved. JEL clas...

Incentive Design and Trust: Comparing the Effects of Tournament and Team-Based Incentives on Trust We explore the extent to which the structure of incentives affects trust. We hypothesize that the degree to which different incentive mechanisms emphasize competition (via the perceived intentions of others) and entitlements (via the perceived property rights) will affect individuals’ subsequent b...

We assess the strength of the different conditions identified in the literature of robust mechanism design. We focus on three conditions: ex post incentive compatibility, robust monotonicity, and robust measurability. Ex post incentive compatibility has been shown to be necessary for any concept of robust implementation, while robust monotonicity and robust measurability have been shown to be n...

When a principal and an agent operate with simple contracts, in equilibrium, renegotiation will occur after the agent takes her action. Since renegotiation makes incentive contracts non-credible, the principal may prefer non-renegotiable monitoring options. The current literature does not fully reconcile these predictions with the observation of simple, non-renegotiated incentive contracts. We ...

Dynamic Incentive Effects of Heterogeneity in Multi-Stage Promotion Contests This paper shows that the incentive effects of heterogeneity may be positive rather than negative in dynamic contests with multiple stages. In particular, the well-studied adverse effects of heterogeneity in static interactions are compensated by positive continuation-value and selection effects. Due to these positive ...

We consider a general scheme to construct Bayesian incentive-compatible mechanisms using a suitable ‘variable mechanism parametrization.’ The key idea is to perturb a given direct mechanism, which might not be truth revealing, introducing sufficient variability as a function of agents’ announcements to generate incentives for truthful revelation. We discuss a variable-price auction in a general...

This entry shows why self-interested agents manage to cooperate in a long-term relationship. When agents interact only once, they often have an incentive to deviate from cooperation. In a repeated interaction, however, any mutually beneficial outcome can be sustained in an equilibrium. This fact, known as the folk theorem, is explained under various information structures. This entry also compa...

We consider the generalization of Shapley and Scarf’s (1974) [Shapley, L., Scarf’s, H., 1974. On cores and indivisibility. Journal of Mathematical Economics 1, 23–37.] model of trading indivisible objects (houses) to so-called multiple-type housing markets. We show that the prominent solution for these markets, the coordinate-wise core rule, is second-best incentive compatible. © 2007 Elsevier ...