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Delegation of inves...
Delegation of investment decisions, and optimal remuneration of agents
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- Lindbeck, Assar (författare)
- Stockholms universitet,Institutet för internationell ekonomi,Research Institute of Industrial Economics, Sweden,Stockholm University (SE)
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- Weibull, Jörgen (författare)
- Stockholm School of Economics,Handelshögskolan i Stockholm
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(creator_code:org_t)
- Elsevier BV, 2020
- 2020
- Engelska.
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Ingår i: European Economic Review. - : Elsevier BV. - 0014-2921 .- 1873-572X. ; 129
- Relaterad länk:
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https://urn.kb.se/re...
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visa fler...
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https://doi.org/10.1...
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https://research.hhs...
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Abstract
Ämnesord
Stäng
- We analyze an investor who delegates information acquisition and investment decisions to an agent. The investor cannot monitor the agent's effort or information. Optimal pay schemes contain bonuses that increase with the net return rate of the investment, but, unlike conventional contracts, at a decreasing rate. Moreover, investments with low return rates are penalized, again unlike conventional contracts. Nevertheless, it may be optimal for the investor to reward the agent above the agent's reservation utility. We examine the role of the agent's risk attitude for the shape of the pay scheme, and whether firing after bad investments is a more effective threat than reduced pay. We also analyze how the nature of the contract changes if the agent is given bargaining power.
Ämnesord
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business (hsv//eng)
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Nyckelord
- Delegation
- Principal-agent
- Principal-expert
- Investment
- Information acquisition
- Rational inattention
- Contract
- Bonus
- Penalty
- Lambert W function
Publikations- och innehållstyp
- ref (ämneskategori)
- art (ämneskategori)
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