Multiperiod Contract Problems with VeriÃ–able and UnveriÃ–able Outputs
ã€€ã€€ Why do some employees receive only Â…xed or incentive pay, while others receive a mix of Â…xed and incentive pay? Moreover, why do the lengths of wage contracts diÂ¤er across these types of pay? This paper attempts to respond to this economic puzzle by developing a theoretical model of multiperiod contracts that incorporates short-, medium-, and long-term contracts with diÂ¤erent wage proÂ…les. We obtain diÂ¤erent combinations of these contracts as equilibria when the eÂ¢ ciency of investment in human capital changes endogenously over time.
|Date of creation:||Jul 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fudenberg, Drew & Holmstrom, Bengt & Milgrom, Paul, 1990.
"Short-term contracts and long-term agency relationships,"
Journal of Economic Theory,
Elsevier, vol. 51(1), pages 1-31, June.
- Drew Fudenberg & Bengt Holmstrom & Paul Milgrom, 1987. "Short-Term Contracts and Long-Term Agency Relationships," Working papers 468, Massachusetts Institute of Technology (MIT), Department of Economics.
- Bengt Holmstrom, 1979.
"Moral Hazard and Observability,"
Bell Journal of Economics,
The RAND Corporation, vol. 10(1), pages 74-91, Spring.
- Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
- Georg Nöldeke & Klaus M. Schmidt, 1992.
"Option Contracts and Renegotiation - A Solution to the Hold-Up Problem,"
Discussion Paper Serie A
417, University of Bonn, Germany, revised Aug 1993.
- Georg Noldeke & Klaus M. Schmidt, 1995. "Option Contracts and Renegotiation: A Solution to the Hold-Up Problem," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 163-179, Summer.
- Nöldeke, Georg & Schmidt, Klaus M., 1995. "Option contracts and renegotiation: A solution to the Hold-Up Problem," Munich Reprints in Economics 19329, University of Munich, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2013cf896. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office)
If references are entirely missing, you can add them using this form.