This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Bait Contracts

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Marie-Louise Vierø () (Queen's University)

Additional information is available for the following registered author(s):

Abstract

The granting of stock options to employees who have negligible impact on company performance intuitively violates Holmstrom's (1979) sufficient statistic result. This paper revisits the sufficient statistic question of when to condition a contract on an outside signal in a principal-agent model in which I introduce imprecise (or vague) information. The paper applies a choice theoretic framework introduced in Olszewski (2007) and Ahn (2008) and extended by Viero (2009a), who denoted it vague environments. I show that if the signal is vague, Holmstrom's result can be overturned.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.econ.queensu.ca/working_papers/papers/qed_wp_1212.pdf
File Format: application/pdf
File Function: First version 2009
Download Restriction: no

Publisher Info
Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1212.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 17 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:qed:wpaper:1212

Contact details of provider:
Postal: Kingston, Ontario, K7L 3N6
Phone: (613) 533-2250
Fax: (613) 533-6668
Email:
Web page: http://www.econ.queensu.ca/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Mark Babcock).

Related research
Keywords: contracts; vagueness; optimism; incentives; signals; stock options;

Find related papers by JEL classification:
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
D20 - Microeconomics - - Production and Organizations - - - General
D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

This paper has been announced in the following NEP Reports:

Statistics
Access and download statistics

Did you know? RePEc stands for Research Papers in Economics.

This page was last updated on 2009-11-26.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.