| 来源类型 | Discussion paper
|
| 规范类型 | 论文
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| 来源ID | DP15378
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| DP15378 Uncertainty, Contracting, and Beliefs in Organizations |
| David Dicks; Paolo Fulghieri
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| 发表日期 | 2021-07-29
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| 出版年 | 2021
|
| 语种 | 英语
|
| 摘要 | We examine a multidivisional firm with headquarters exposed to moral hazard by division managers under uncertainty. We show the aggregation and linearity properties of Holmström and Milgrom (1987) hold under IID ambiguity of Chen and Epstein (2002). Due to uncertainty aversion, agents' beliefs depend endogenously on their exposure to uncertainty, either for their position in the organization (hierarchical exposure) or contracts (contractual exposure). Incentive contracts, by loading primarily on division cash-flow, lead division managers to be more conservative than headquarters, aggravating moral-hazard. By hedging uncertainty, headquarters design contracts that reduce disagreement, lower incentive provision costs, promoting effort. Because hedging uncertainty interacts with hedging risk, optimal contracts differ from those in standard principal-agent models. Our model helps explain the prevalence of equity-based incentive contracts and the rarity of relative-performance compensation. |
| 主题 | Financial Economics
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| 关键词 | Ambiguity
Incentive contracting
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| URL | https://cepr.org/publications/dp15378-0
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/545366
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推荐引用方式
GB/T 7714 |
David Dicks,Paolo Fulghieri. DP15378 Uncertainty, Contracting, and Beliefs in Organizations. 2021.
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