“(MA)LINGERING ON THE DISABLED LIST”

In this article, we examine two offsetting incentives that may affect a baseball player's willingness to play with injuries. We allow for the usual disincentive effects associated with long‐term contracts, while also incorporating the importance of the incentives associated with contract renewal. Our results are consistent with the previous work that showed those likely to retire at the end of their current contracts have an increased incentive to shirk. For those who expect to re‐sign a subsequent contract, however, we find that players tend to step up their effort as they approach the final year of their contract. (JEL L83)     

风险投资家的最优激励契约模型研究--一种基于逆向选择和道德风险条件下的博弈模型分析

为减少风险投资融资中风险投资家的逆向选择和道德风险,风险投资者必须设立一套有效的激励机制来让风险投资家选择,从而根据风险投资家选择的结果来甄别其真实能力类型,同时又能激励其努力工作。文章建立了风险投资家能力类型和努力都是不可观测条件下的最优激励契约模型,并根据显示原理,利用最优控制理论求出了最优解进而进行了分析。得出的结论是:最优激励契约能使高能力风险投资家乐于选择具有高强度激励、低固定收入和风险小的项目,同时又能激励其签约后更加努力工作。     

Incentive Contracts for Infrastructure,Litigation and Weak Institutions

In this paper we revisit incentive contract design in a simple setting, after developing a model that captures the fact that in weak institutional settings the procurement of large scale public works through contracts with strong incentives for private firms, may result in excessive litigation over contract terms. This result is possible because we assume that parties in litigation can influence (by purchasing better or more legal services) the observable merits of their case. In weak institutional settings, governments have an inherent disadvantage in these litigation contests. We show that a commitment to a prespecified level of litigation effort by the government, together with weaker incentive contracts, is a more efficient procurement mechanism.Jel Classification: D8, H57, H54, K41, K23, L51     

Electricity wheeling and incentive regulation

This paper relates social contract regulation strategies to a particularly important comtemporary issue in energy regulation—electricity wheeling; we find that substantial gains in economic efficiency may be possible. First, social contracts give potential wheelers more monetary incentive than traditional regulatory procedures to provide wheeling services to interested third parties. Second, social contract regulation gives potential wheelers better incentives to measure marginal costs accurately. Third, under social contract regulation, wheelers have proper incentives to install efficient amounts of transmission capacity, thereby avoiding Averch-Johnson and other regulatory distortions that emerge in traditional regulation.     

Incentives and disutility of effort in a linear piece-rated employment contract

Previous studies on contracts which involve incentives and risk sharing seldom give explicit treatment of the impact of the agent's disutility of effort on the incentive properties of the contract. It is shown that in a linear piece-rated employment contract which pays workers according to both the time worked and output, an increase in the piece rate does not necessarily induces more effort, as generally taken for granted. The incentive effect of the piece rate in fact depends on the extent to which the worker dislikes effort.     

The Efficiency of Stock-Based Incentives: Experimental Evidence

The authors report the results of laboratory experiments in which subjects are offered contracts structured similar to equity compensation packages and result in subjects receiving cash payments that are a function of their effort and random factors. The authors compare the outcomes from alternative contractual forms to theoretical benchmarks and report the efficiency of the contracts to provide evidence on whether options or stocks that have same economic cost to the employer yield the same or different effort levels from the managers. Both contracts elicit lower levels of effort than would be chosen by an expected-payoff-maximizing decision maker. Effort choices under the option contract did not differ significantly from effort choices under the stock contract except for male subjects. The option contract elicits a higher effort level for these subjects and condition than the stock contract. Effort choices reflect loss aversion and regret based on past stock price realizations.     

Self-Enforcing Intergenerational Social Contracts for Pareto Improving Pollution Mitigation

We consider, in an overlapping generations model with an environmental externality, a scheme of contracts between any two successive generations. Under each contract, agents of the young generation invest a share of their labor income in pollution mitigation in exchange for a transfer in the second period of their lives. The transfer is financed in a pay-as-you-go manner by the next young generation. Different from previous work we assume that the transfer is granted as a subsidy to capital income rather than lump sum. We show that the existence of a contract which is Pareto improving over the situation without contract for any two generations requires a sufficiently high level of income. In a steady state with social contracts in each period, the pollution stock is lower compared to a steady state without contracts. Analytical and numerical analysis of the dynamics under Nash bargaining suggests that under reasonable conditions, also steady state income and welfare are higher. Delaying the implementation of a social contract for too long or imposing a contract with too low mitigation can be costly: Net income may inevitably fall below the threshold in finite time so that Pareto improving mitigation is no longer possible and the economy converges to a steady state with high pollution stock and low income and welfare. In the second part of the paper, we study a game theoretic setup, taking into account that credibly committing to a contract might not be possible. We show that with transfers granted as a subsidy to capital income, there exist mitigation transfer schemes which are both Pareto improving and give no generation an incentive to deviate from any of its contracts even in a dynamically efficient economy. Social contracts coexist with private savings.     

Regulatory design and technical efficiency: public transport in France

The provision of local public transport in France involves private and public firms and the use of incentive contracts to regulate them. We study the effect of these institutional features on the sector’s efficiency using a long panel data of firms, with a two-stage estimation procedure. First, we use nonparametric data envelopment analysis techniques to estimate input usage efficiency, following a conditional approach that controls for differences in the environments in which the firms operate. Second, we estimate semiparametric censored regressions, using fixed effects to control for unobserved sources of heterogeneity. Our results point to a differential effect of private and mixed public-private companies. In particular, having the performance of public operators as the benchmark, efficiency is relatively higher for private firms, but lower when the service is delegated to a mixed public-private firm. In the latter case, the effects diverge by contract type: when the contract is of the cost reimbursement type, performance is lower than the public firm benchmark, while for other contract types, there are no statistically significant differences.     

Unfair incentives: A behavioural note on sharecropping

We conducted a laboratory‐in‐the‐field experiment with real‐life tenants in Ethiopia to test the incentive effects of fixed wage, sharecropping, fixed rent, and ownership contracts. The experimental task resembles a common process in agricultural production. The sharecropping contract is a piece rate scheme framed as a profit‐sharing agreement. Sharecropping output was about 12 percent smaller than the fixed rent output. Surprisingly, it is statistically indistinguishable from the fixed wage output, despite substantial piece rates. This effect is driven by real‐life sharecroppers. Their sharecropping output was smaller than that of non‐sharecroppers, especially in a region where a controversial land reform took place. We argue that our subjects dislike sharecropping contracts because of the unfair profit sharing and the disputed allocation of land. Fairness concerns, therefore, may be another impediment to efficiency under the sharecropping contract.     

弹性分成：分税制的契约与影响

本文从契约角度分析分税制的性质,并用统一的框架解释了分税制的正反两方面作用。研究认为：中国的分税制本质上是一个弹性的分成合同系统。它是中央政府与地方政府关于剩余分配的各种子契约的组合。这些子契约可归为四种基本形式--工资合同、定额合同、分税合同和分成合同,并且它们之间具有很强的互补性,由此构成了一个富有弹性的分成合同系统。在信息不对称的条件下,这个激励系统能够激励地方政府发展经济,但是易扭曲地方政府行为,促使经济重复建设和粗放型增长模式的形成。     

Moral hazard,land fertility and sharecropping in a rural area of the Philippines

Introducing concerns about land fertility for landlords in a Principal–Agent model of sharecropping with moral hazard, we show that the optimal contract under limited commitment reflects a trade-off between production and land quality maintenance. Using data from the Philippines, a model where the leasing out and contract choices are simultaneous is estimated and avoids the selectivity bias of observed contracts. Landlords prefer to use more incentive contracts for more fertile plots and less incentive ones when crop choices induce land overuse. Empirical tests reject the model of pure risk sharing in production and show the interest of taking land quality maintenance into account.     

Quality distortions in vertical relations

This paper examines how delivery tariffs and private quality standards are determined in vertical relations that are subject to asymmetric information. We consider an infinitely repeated game where an upstream firm sells a product to a downstream firm. In each period, the firms negotiate a delivery contract comprising the quality of the good as well as a non-linear tariff. Assuming asymmetric information about the actual quality of the product and focusing on incentive compatible contracts, we show that from the firms’ perspective delivery contracts lead to more efficient contracts and thus higher overall profits the lower the firms’ outside options, i.e. the higher their mutual dependency. Buyer power driven by a reduced outside option of the upstream firm enhances the efficiency of vertical relations, while buyer power due to an improved outside option of the downstream firm implies less efficient outcomes.     

Do sellers offer menus of contracts to separate buyer types? An experimental test of adverse selection theory

In the basic adverse selection model, a seller makes a contract offer to a privately informed buyer. A fundamental hypothesis of incentive theory is that the seller may want to offer a menu of contracts to separate the buyer types. In the good state of nature, total surplus is not different from the symmetric information benchmark, while in the bad state, private information may be welfare-reducing. We have conducted a laboratory experiment with 954 participants to test these hypotheses. While the results largely corroborate the theoretical predictions, we also find that private information may be welfare-enhancing in the good state.     

Occupational Choice and Dynamic Incentives

We study an overlapping generations version of the principal-agent problem, where incentive contracts are determined in general equilibrium. All individuals are workers when young, but have a choice between becoming entrepreneurs or remaining workers when old. Imperfections in the credit market give rise to rents in entrepreneurial activities involving capital. These rents motivate poor young agents to work hard and save to overcome the borrowing constraints. With a labour market that is subject to moral hazard, the increased effort raises social welfare. Policies that reduce credit market imperfections, or redistribute income, may reduce welfare by dampening this effect.     

Fairness and Incentives in a Multi‐task Principal–Agent Model

This paper reports on a two‐task principal–agent experiment in which only one task is contractible. The principal can either offer a piece‐rate contract or a (voluntary) bonus to the agent. Bonus contracts strongly outperform piece‐rate contracts. Many principals reward high effort on both tasks with substantial bonuses. Agents anticipate this and provide high effort on both tasks. In contrast, almost all agents with a piece‐rate contract focus on the first task and disregard the second. Principals understand this and predominantly offer bonus contracts. This behavior contradicts the self‐interest theory but is consistent with theories of fairness.     

企业融资中的控制权安排与企业家的激励

在企业融资中,企业家不仅关心项目的货币收益,而且关心非货币收益,而投资者仅仅关心货币收益。考虑到双方的融资合同是不完全的且企业家受到财富约束,一份初始的激励合同通常无法解决双方存在的潜在利益冲突。作为一个结果,控制权安排(即谁做出关键性决策)是金融合同的一个重要维度。Aghion-Bolton(1992)集中于事后有效率。他们证明了,条件控制在一些环境下是均衡的控制权安排。然而,Hart(2001)提出了一个质疑:他们的模型忽略了一个重要的变量,即努力。通过引入企业家的事前努力,本文解释了为什么控制权在坏状态而不是在好状态转移给投资者。更进一步,本文发现,金融约束的程度大小决定了项目的均衡控制权安排。     

基于企业生命周期的高管 激励契约最优动态配置* ——价值分配的视角

本文基于生命周期和委托代理理论，在价值分配视角下，阐释了生命周期演进过程中高管效用敏感性变化规律以及不同高管激励机制运行特征，构建了高管激励契约最优动态配置方案，并利用中国高科技上市公司2010-2013年的面板数据，对高管激励契约体系对企业价值分配的影响进行了实证检验。研究结果表明，在企业成长期和蜕变期，高管薪酬激励能够有效抑制代理成本；而高管声誉激励机制仅在企业成熟期表现出对代理成本的抑制效应；生命周期各阶段内，控制权激励均未发挥显著的治理作用，相反在蜕变期，控制权沦为高管挖掘私人利益的工具。因此，改善薪酬激励期限结构，提升声誉激励和高管市场约束的持续性，构建高管控制权管理制度体系是实现高管激励契约最优动态配置的必经之路。     

Electricity market mergers with endogenous forward contracting

We analyze the effects of electricity market mergers in an environment where firms endogenously choose their level of forward contracts prior to competing in the wholesale market. We apply our model to Alberta’s wholesale electricity market. Firms have an incentive to reduce their forward contract coverage in the more concentrated post-merger equilibrium. We demonstrate that endogenous forward contracting magnifies the price increasing impacts of mergers, resulting in larger reductions in consumer surplus. Current market screening procedures used to analyze electricity mergers consider firms’ pre-existing forward commitments. We illustrate that ignoring the endogenous nature of firms’ forward commitments can yield biased conclusions regarding the impacts of market structure changes such as mergers. In particular, we show that the price effects of mergers can be largely underestimated when forward contract quantities are held at pre-merger levels. Whether the profits of the merged firm are greater with fixed or endogenous forward quantities is ambiguous.     

Incentive contracts in delegated portfolio management under VaR constraint

This paper studies the incentive effect of linear performance-adjusted contracts in delegated portfolio management under a value-at-risk (VaR) constraint. It is shown that a linear performance-based contract can provide incentives for the portfolio manager to work at acquiring private information under a VaR risk constraint. The expected utility and optimal effort of a risk-averse manager are increasing functions of the return sharing ratio in the contract. However, a risk constraint causes the portfolio manager to reduce effort in gathering private information, suggesting that the VaR constraint increases the moral hazard between the investor and the manager.