Arantxa Jarque

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Nicola Pavoni and especially Hugo Hopenhayn and Iván Werning for very useful suggestions and discussions. I gratefully acknowledge …nancial support from the Banco de España and the hospitality of the Universidad Torcuato di Tella, were this research was started, as well as that of the UCLA Economics Department. Abstract We study a problem of repeated moral(More)
I study a problem of repeated moral hazard in which the effect of effort is persistent over time: each period's outcome distribution is a function of a geometrically distributed lag of past efforts. I show that when the utility of the agent is linear in effort, a simple rearrangement of terms in his lifetime utility translates this problem into a related(More)
We study a multiperiod principal-agent problem with moral hazard in which effort is persistent: the agent is required to exert effort only in the initial period of the contract, and this effort determines the conditional distribution of output in the following periods. We provide a characterization of the optimal dynamic compensation scheme. As in a static(More)
We present a sequence of two-period models of incentive-based compensation in order to understand how the properties of optimal compensation structures vary with changes in the model environment. Each model corresponds to a different occupation within a bank, such as credit line managers, loan originators, or traders. All models share a common trait: the(More)
M any occupations are subject to learning by doing: Effort at the workplace early in the career of a worker results in higher productivity later on. 1 In such occupations, if effort at work is unobservable , a moral hazard problem arises as well. The combination of these two characteristics of effort implies that employers need to provide incentives for the(More)
A multi–agent, moral–hazard model is used to analyze how to regulate compensation of bank employees below a CEO in order to limit bank risk. Unlike in the single–agent model, pay for performance does not necessarily create risk. If employee returns are uncorrelated, pay is irrelevant for risk. If returns are correlated, a low wage can indicate risk. If(More)
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