Contracts, Incentives and Information: Theory and Evidence

A special issue of Games (ISSN 2073-4336).

Deadline for manuscript submissions: closed (30 June 2019) | Viewed by 5401

Special Issue Editors


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Guest Editor
School of Social Sciences, College of Humanities, Arts, & Social Sciences, Nanyang Technological University
Interests: microeconomics; game theory; behavioral economics; experimental economics; public economics; industrial organization; risk

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Guest Editor
Division of Economics, Nanyang Technological University, Singapore
Department of Economics, National University of Singapore, Singapore
Interests: applied economic theories

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Guest Editor
Department of Economics National University of Singapore
Interests: economic theory; game theory

Special Issue Information

Dear Colleagues,

Game theory has become the standard tool in analyzing strategic interactions by economists. A particularly prominent application is the study of contracting, which can often be modeled as dynamic games with transfers and asymmetric information, in which principals move first by offering contracts and agents best-respond accordingly. Moreover, the communication of verifiable and unverifiable information can play a key role in contracting and other game-theoretical applications. Recent advances in behavioral economics have also enriched our understanding in how boundedly rational individuals approach such strategic interactions and contractual arrangements. In particular, it has been demonstrated that contracts can be designed to exploit the psychological biases of agents. This Special Issue is intended to reflect these developments. To this end, we welcome submissions, using either theoretical, empirical, or experimental methods of investigation, on the following areas:

  • Moral hazard, adverse selection, mechanism design, and incomplete contracts
  • Communication, information disclosure, and information design
  • Behavioral effects including mistakes and the interplay of financial and non-financial incentives
  • Analysis of related applications (e.g., insurance, investment, consumption, and policy)
Dr. Jonathan Tan
Dr. Pak Hung Au
Dr. Yi-Chun Chen
Guest Editors

Manuscript Submission Information

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Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Games is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1600 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • moral hazard
  • adverse selection
  • mechanism design
  • contracts
  • communication
  • information
  • disclosure
  • behavioral
  • incentives
  • applications.

Published Papers (1 paper)

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Research

22 pages, 297 KiB  
Article
The Optimal Contract under Adverse Selection in a Moral-Hazard Model with a Risk-Averse Agent
by François Maréchal and Lionel Thomas
Games 2018, 9(1), 12; https://doi.org/10.3390/g9010012 - 01 Mar 2018
Cited by 4 | Viewed by 5112
Abstract
This paper studies the optimal contract offered by a risk-neutral principal to a risk-averse agent when the agent’s hidden ability and action both improve the probability of the project being successful. We show that if the agent is sufficiently prudent and able, the [...] Read more.
This paper studies the optimal contract offered by a risk-neutral principal to a risk-averse agent when the agent’s hidden ability and action both improve the probability of the project being successful. We show that if the agent is sufficiently prudent and able, the principal induces a higher probability of success than under moral hazard, despite the costly informational rent given up. Moreover, there is distortion at the top. Finally, the conditions to avoid pooling are difficult to satisfy because of the different kinds of incentives to be managed and the overall trade-off between rent extraction, insurance, and efficiency involved. Full article
(This article belongs to the Special Issue Contracts, Incentives and Information: Theory and Evidence)
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