We are interested in the rate of convergence in L 1 of the approximate solution of a conservation law generated by a monotone finite difference scheme. Kuznetsov has proved that this rate is 1/2 [USSR Comput. We prove, by constructing appropriate initial data for the Cauchy problem, that Kuznetsov's estimates are sharp for a nonlinear flux as well. 1.… (More)
* We are thankful to Sunil Dutta and Stefan Reichelstein for sharing their unpublished notes on the analysis of consumption choice with time-additive preferences.
This paper examines the impact of repeated renegotiation on incentives and managerial tenure when performance information is serially correlated. In addition to providing a general solution to a multi-period agency problem with serially correlated performance measures, the paper characterizes optimal managerial tenure/turnover policies as a function of the… (More)
Using a dynamic LEN model we show how renegotiation based on a non-contractible leading indicator of a forthcoming performance measure introduces demand for discretionary accruals and equilibrium earnings management. In a setting with capital investments, we show how non-discretionary and discretionary accruals combine to alleviate both commitment and… (More)
This paper presents a unified moral hazard framework with renegotiation and anticipated managerial turnover for examining incentive dynamics given correlated performance measures and long-term actions which is applicable to CEO turnover studies and related work on the " horizon problem ". The main contribution is an explicit solution for the dynamic agency… (More)