Optimal contracts for research agents

Shan, Yaping

doi:10.1111/1756-2171.12169

Cited by 16 publications

(4 citation statements)

References 26 publications

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“…In other settings, a principal may want to motivate agents' effort to increase the arrival rate of "good" arrivals. Shan (2017), for example, considers a principal hiring two agents to carry out a multistage project, whose successful outcomes follow a Poisson process with a rate jointly determined by the effort choices of both agents. The study considers free riding issues when the total effort levels determine the arrival rate, an aspect that we do not consider.…”

Section: Introductionmentioning

confidence: 99%

Efficient Resource Allocation Contracts to Reduce Adverse Events

Liang

Sun

Tang

et al. 2023

Operations Research

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On online platforms, goods, services, and content providers, also known as agents, introduce adverse events. The frequency of these events depends on each agent’s effort level. In “Efficient Resource Allocation Contracts to Reduce Adverse Events,” Liang, Sun, Tang, and Zhang study continuous-time dynamic contracts that utilize resource allocation and monetary transfers to induce agents to exert effort and reduce the arrival rate of adverse events. They devise an iterative algorithm that characterizes and calculates such contracts and specify the profit-maximizing contract for the platform, also known as the principal. In contrast to the single-agent case, in which efficiency is not achievable, they show that efficient and incentive-compatible contracts, which allocate all resources and induce agents to exert constant effort, generally exist with two or more agents. Additionally, they also provide efficient and incentive-compatible dynamic contracts that can be expressed in closed form and are therefore easy to understand and implement in practice.

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Section: Introductionmentioning

confidence: 99%

Efficient Resource Allocation Contracts to Reduce Adverse Events

Liang

Sun

Tang

et al. 2023

Operations Research

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“…The main distinction of our paper is that we consider an infrastructure construction problem in which the time to finish the project is stochastic and the construction follows a Poisson process. In addition, our theoretical setting is also related to the optimal dynamic contracting with moral-hazard in a Poisson framework (e.g., Biais et al 2010;Myerson 2015;Shan 2017;Sun and Tian 2018). Our paper applies this method to study the role of NDBs and contribute the related literature by investigating the contract implementation through an optimal capital structure of an infrastructure project.…”

Section: Introductionmentioning

confidence: 99%

A theory of National Development Bank: long-term investment and the agency problem

Jiang,

Xia,

et al. 2023

Econ Theory

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This paper applies the contract theory to study the role of National Development Bank (NDB) in financing infrastructure investment. We first show that to mitigate overrun issues resulting from the agency problem during the infrastructure construction, the government uses mixed financing strategy combining fiscal funding with NDB loans. We then endogenize the NDB investment strategy to study the determinants of NDB profit and use cross-country panel data to empirically test our model predictions.

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“…Uncertainty about project quality is crucial to our analysis. Green and Taylor (2016), Hu (2014), and Shan (2017) consider principal one‐agent models with multistage projects without uncertainty about the quality of each stage. In our setting, under no uncertainty, the principal can implement efficient effort at no informational cost.…”

Section: Introductionmentioning

confidence: 99%

Experimentation in organizations

Moroni

2022

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We consider a moral hazard problem in which a principal provides incentives to a team of agents to work on a risky project. The project consists of two milestones of unknown feasibility. While working unsuccessfully, the agents' private beliefs regarding the feasibility of the project decline. This learning requires the principal to provide rents to prevent the agents from procrastinating and free‐riding on others' discoveries. To reduce these rents, the principal stops the project inefficiently early and gives identical agents asymmetric experimentation assignments. The principal prefers to reward agents with better future contract terms or task assignments rather than monetary bonuses.

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Optimal contracts for research agents

Cited by 16 publications

References 26 publications

Efficient Resource Allocation Contracts to Reduce Adverse Events

Efficient Resource Allocation Contracts to Reduce Adverse Events

A theory of National Development Bank: long-term investment and the agency problem

Experimentation in organizations

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