Essays in Contract Theory

Essays in Contract Theory

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In the third essay, we propose a repeated adverse selection model where the principal hires two agents to implement some policies in two regions. In each region, there is a local party which can bribe the agent to affect the policy implementation. We show that in each period there exist multiple optimal contracts which differ only in how information rents are distributed within a coalition. The multiplicity of optimal contracts allows the principal to pre-commit to some implicit distribution rules for the next period. We show that if the principal can commit to mandatory job rotation, then the expected payoff of the principal can be improved by manipulating the implicit distribution rules appropriately. On the other hand, mandatory job rotation is costly because the gain from local experience is forfeited. Whether mandatory job rotation policy is desirable depends on the tradeoff between these benefits and costs.In this paper, we are interested in how job rotation helps alleviate the problem of corruption. ... For example, Eguchi (2005) proposes that job transfer is necessary in preventing workers from performing harmful influential activities, includinganbsp;...

Title:Essays in Contract Theory
Author:Fei-Lung Tzang
Publisher:ProQuest - 2008


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