Arantxa Jarque

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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)
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)
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)
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