search query: @author Young, R. / total: 7
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| Author: | Arya, A. Fellingham, J. Young, R. |
| Title: | Contract-based motivation for keeping records of a manager's reporting and budgeting history |
| Journal: | Management Science
1994 : APR, VOL. 40:4, p. 484-495 |
| Index terms: | AGENCY THEORY CONTRACTS ORGANIZATION |
| Language: | eng |
| Abstract: | This paper analyzes the role of the agent's bankruptcy constraints in multiperiod principal-agent models with asymmetric information. Conditions are provided under which commitment to a long-term contract involving N rounds of investment improves upon repetition of N identical single-period contracts. Further, when the agent's reservation wage is sufficiently low the optimal contract is always long term. Keeping records of a manager's history of reporting facilitates contracting, since optimal contracts may require a link between past reports and future investments over a duration of two or more periods. |
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