Sebastian Kranz

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We modify the principal-agent model with moral hazard by assuming that the agent is expectation-based loss averse according to K˝ oszegi and Rabin (2006, 2007). The optimal contract is a binary payment scheme even for a rich performance measure, where standard preferences predict a fully contingent contract. The logic is that, due to the stochastic(More)
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In this paper, we study infinitely repeated games with imperfect public monitoring and the possibility of monetary transfers. We develop an efficient algorithm to compute the set of pure strategy public perfect equilibrium payoffs for each discount factor. We also show how all equilibrium payoffs can be implemented with a simple class of stationary(More)
We study an industry in which an upstream monopolist supplies an essential input at a regulated price to several downstream …rms. Legal unbundling means that a downstream …rm owns the upstream …rm, but this upstream …rm is legally independent and maximizes its own upstream pro…ts. We allow for non-tari¤ discrimination by the upstream …rm and show that under(More)
This paper studies discounted stochastic games with perfect or imperfect public monitoring and the opportunity to conduct voluntary monetary transfers. We show that for all discount factors every public perfect equilibrium payoff can be implemented with a simple class of equilibria that have a stationary structure on the equilibrium path and optimal penal(More)
a r t i c l e i n f o We study an industry in which an upstream monopolist supplies an essential input at a regulated price to several downstream firms. Legal unbundling means in our model that a downstream firm owns the upstream firm, but this upstream firm is legally independent and maximizes its own upstream profits. We allow for non-tariff(More)
We propose a unified framework to study relational contracting and holdup problems in infinite horizon stochastic games. We first illustrate that with respect to long run decisions, the common formulation of rela-tional contracts as Pareto-optimal public perfect equilibria is in stark contrast to fundamental assumptions of holdup models. We develop a model(More)