Optimal long-term contracting with learning
He, Zhiguo; Wei, Bin; Yu, Jianfeng; Gao, Feng;
- Publisher: Atlanta, GA: Federal Reserve Bank of Atlanta
- Subject: D8 | D86 | M12 | executive compensation | moral hazard | Bayesian learning | hidden information | belief manipulation | private savings | continuous time | stock options
- ddc: ddc:330
We introduce uncertainty into Holmstrom and Milgrom (1987) to study optimal long-term contracting with learning. In a dynamic relationship, the agent's shirking not only reduces current performance but also increases the agent's information rent due to the persistent be... View more