IDEAS home Printed from https://ideas.repec.org/a/bla/manchs/v74y2006i2p190-213.html
   My bibliography  Save this article

Dynamic Incentive Contracts Under No Commitment To Periodic Auditing And A Retrospective Penalty System

Author

Listed:
  • HSIAO‐CHI CHEN

Abstract

This study extends Khalil's (RAND Journal of Economics, Vol. 28 (1997), No. 4, pp. 629–640) model to a multiperiod one under no principal's commitment to periodic auditing and a retrospective penalty system. The optimal dynamic contracts may not exist. When they exist, there is no sure first‐period auditing and either the first‐best or a single contract is offered in the second period. The Khalil‐type (1997) and Baron–Myerson‐type (Econometrica, Vol. 50 (1982), No. 4, pp. 911–930) contracts could serve the first‐period contracts of the hybrid and separating equilibria, respectively. However, optimal dynamic contracts cannot be duplicated by these static contracts. Finally, players may prefer our pooling equilibrium to Laffont and Tirole's (European Economic Review, Vol. 31 (1987), No. 4, pp. 901–926). And the pooling equilibrium may weakly Pareto dominate the separating one.

Suggested Citation

  • Hsiao‐Chi Chen, 2006. "Dynamic Incentive Contracts Under No Commitment To Periodic Auditing And A Retrospective Penalty System," Manchester School, University of Manchester, vol. 74(2), pages 190-213, March.
    • Handle: RePEc:bla:manchs:v:74:y:2006:i:2:p:190-213
    DOI: 10.1111/j.1467-9957.2006.00488.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9957.2006.00488.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9957.2006.00488.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hsiao-Chi Chen & Shi-Miin Liu & Chiung-Yun Chang, 2013. "Commitment or no-commitment to monitoring in emission tax systems?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(2), pages 171-188, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:74:y:2006:i:2:p:190-213. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/semanuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.