Home About us Contact
|
Home About us Contact | ||
|
|
||
Effort Level (effort + level)
Selected AbstractsMoral Hazard Contracting and Private Credit MarketsECONOMETRICA, Issue 3 2004In-Uck Park This paper studies the impact of credit markets on optimal contracting, when the agent's "interim preference" over upcoming contracts is private information because personal financial decisions affect it via the wealth effect. The main result is a severe loss of incentive provision: equilibrium contracts invariably cause the agent to shirk (i.e., exert minimal effort) if the agent's private financial decision precedes moral hazard contracting. The basic intuition is that committing on another private variable, other than the effort level, exposes the parties to further exploitation of efficient risk-sharing by relaxing the incentive constraint that was binding ex ante, unless the risk-sharing was fully efficient to begin with. [source] Fair Offers in a Repeated Principal,Agent Relationship with Hidden ActionsECONOMICA, Issue 286 2005François Cochard We test a repeated principal,agent relationship with hidden actions in the laboratory. At each period, the principal offers payments to the agent in order to induce him to provide the high effort level. The agent can accept or reject the offer; if he accepts it, he can choose the high or the low effort level. We observe that offered payments are higher than predicted by the subgame-perfect equilibrium, and higher in the partners' than in the strangers' design. Furthermore, agents strategically reject inequitable offers in early rounds in order to induce principals to increase payments in the subsequent rounds. [source] Effects of size and fragmentation of marine reserves and fisher infringement on the catch and biomass of coral trout, Plectropomus leopardus, on the Great Barrier Reef, AustraliaFISHERIES MANAGEMENT & ECOLOGY, Issue 3 2005L. R. LITTLE Abstract, A spatially structured simulation model of the population dynamics and line fishing exploitation of common coral trout, Plectropomus leopardus Lacepède, was used to evaluate the effects of infringement and different amounts and arrangements of marine reserves on the Reef Line Fishery of the Great Barrier Reef, Australia. With no marine reserves and under a constant future effort level equal to that for 1996, the size of the population was reduced and the biomass stabilised at about 40% of pre-exploitation levels. Marine reserves were ineffective at conserving biomass when limited infringement was allowed throughout an entire reserve. When infringement was absent altogether or limited to the edges of reserves, larger marine reserves lead to lower total catches and higher overall biomass. When infringement was limited to reserve edges, a single large closure was more effective at conserving biomass than more fragmented arrangements. Simulations suggested that marine reserves might lead to better conservation of a fishery-targeted species if infringement is negligible or limited to reserve margins. Even where infringement occurred only at the edges of reserves, a network of small reserves may be less effective at conserving a targeted species than a smaller number of larger reserves. [source] Strategic Auditing: An Incomplete Information ModelJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2001Peter Cheng This paper presents a stylized model of the strategy game between the auditor and the client. The client is assumed to have either good or bad inherent risk in her reporting system. She chooses a reporting effort level to maintain the accounting records and data management depending on her type of inherent risk. The auditor chooses a high or low level of audit procedures. A high level of auditing procedures will reveal the client's type and effort from which the auditor can decide either to qualify the financial statements or to issue a clean report. The client and the auditor are assumed to move simultaneously. Pure strategy equilibria are derived for all the undominated strategies between the auditor and the client in the region of the model that is more similar to the Fellingham and Newman (1985) model. Unlike their model in which a high auditing level is never a pure strategy in equilibrium, we obtain pure strategy equilibria for high auditing levels. [source] SUSTAINABLE YIELDS IN FISHERIES: UNCERTAINTY, RISK-AVERSION, AND MEAN-VARIANCE ANALYSISNATURAL RESOURCE MODELING, Issue 3 2010CHRISTIAN-OLIVER EWALD Abstract We consider a model of a fishery in which the dynamics of the unharvested fish population are given by the stochastic logistic growth equation Similar to the classical deterministic analogon, we assume that the fishery harvests the fish population following a constant effort strategy. In the first step, we derive the effort level that leads to maximum expected sustainable yield, which is understood as the expectation of the equilibrium distribution of the stochastic dynamics. This replaces the nonzero fixed point in the classical deterministic setup. In the second step, we assume that the fishery is risk averse and that there is a tradeoff between expected sustainable yield and uncertainty measured in terms of the variance of the equilibrium distribution. We derive the optimal constant effort harvesting strategy for this problem. In the final step, we consider an approach that we call the mean-variance analysis to sustainable fisheries. Similar as in the now classical mean-variance analysis in finance, going back to Markowitz [1952], we study the problem of maximizing expected sustainable yields under variance constraints, and with this, minimizing the variance, e.g., risk, under guaranteed minimum expected sustainable yields. We derive explicit formulas for the optimal fishing effort in all four problems considered and study the effects of uncertainty, risk aversion, and mean reversion speed on fishing efforts. [source] Revenue sharing contracts in a supply chain with uncontractible actionsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2008Albert Y. Ha Abstract We consider a supplier,customer relationship where the customer faces a typical Newsvendor problem of determining perishable capacity to meet uncertain demand. The customer outsources a critical, demand-enhancing service to an outside supplier, who receives a fixed share of the revenue from the customer. Given such a linear sharing contract, the customer chooses capacity and the service supplier chooses service effort level before demand is realized. We consider the two cases when these decisions are made simultaneously (simultaneous game) or sequentially (sequential game). For each game, we analyze how the equilibrium solutions vary with the parameters of the problem. We show that in the equilibrium, it is possible that either the customer's capacity increases or the service supplier's effort level decreases when the supplier receives a larger share of the revenue. We also show that given the same sharing contract, the sequential game always induces a higher capacity and more effort. For the case of additive effort effect and uniform demand distribution, we consider the customer's problem of designing the optimal contract with or without a fixed payment in the contract, and obtain sensitivity results on how the optimal contract depends on the problem parameters. For the case of fixed payment, it is optimal to allocate more revenue to the supplier to induce more service effort when the profit margin is higher, the cost of effort is lower, effort is more effective in stimulating demand, the variability of demand is smaller or the supplier makes the first move in the sequential game. For the case of no fixed payment, however, it is optimal to allocate more revenue to the supplier when the variability of demand is larger or its mean is smaller. Numerical examples are analyzed to validate the sensitivity results for the case of normal demand distribution and to provide more managerial insights. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008 [source] The Violent and the WeakAMERICAN JOURNAL OF ECONOMICS AND SOCIOLOGY, Issue 4 2006When Dictators Care about Social Contracts This article explores conditions under which dictators comply with a social contract. We assume society to consist of two groups: one with a comparative advantage in using violence, the other with a comparative advantage in producing private goods. Violence can be used to produce security or to exploit the weaker group. The opportunity for exploitation is limited: it reduces the incentives of the exploited to produce private goods and increases the chances of revolution. Social contracts consist of the exchange of security against a share of the private good, produced at a high effort level. The model allows the derivation of conditions for either compliance or exploitation to occur and provides a comparative static explanation for the transition from one form of government to the other. Thus, it contributes to positive constitutional economics, the research program that is interested in explaining the emergence and change of constitutions. [source] Joint Assessment of Optimal Sales Force Sizes and Sales Call Guidelines: A Management-Oriented ToolCANADIAN JOURNAL OF ADMINISTRATIVE SCIENCES, Issue 3 2005René Y. Darmon Abstract Sales force sizing and sales effort allocation methods vary from simplistic rules of thumb to sophisticated analytical procedures. The former methods are easy to understand and implement, but they are typically inaccurate and probably invalid. The latter procedures may provide more accurate and valid results, but they are more difficult to explain to management and require data collection and analysis that are often quite elaborate. This paper proposes a method of optimal estimation of total sales effort level and time allocation that combines the advantages of both approaches. For each customer segment, this method accounts for the so far neglected, but relevant, optimal call effort allocation between number of calls per account during a planning period and length of sales calls. A case study illustrates this method. Résumé Les méthodes de détermination de la taille et de l'allocation des efforts de vente vont des règles empiriques les plus simples aux procédures analytiques les plus complexes. Les premières sont faciles à comprendre et à appliquer, mais elles sont imprècises et souvent non valides. Les autres méthodes peuvent donner des résultats plus exacts, mais elles sont plus difficiles à expliquer aux managers et nécessitent souvent une collecte et une analyse de données fort laborieuses. Le présent article propose une méthode d'estimation optimale de la taille et de l'allocation des efforts de vente qui combine les avantages des deux approches. Pour chaque segment de la clientèle, la méthode rend compte de l'allocation optimale (souvent négligée, mais pertinente), de l'effort de vente entre le nombre de visites à faire à un client pendant une période de planification et la longueur des visites. Un cas concret illustre la méthode. [source] Implementing a strategy-driven performance measurement system for an applied research groupTHE JOURNAL OF PRODUCT INNOVATION MANAGEMENT, Issue 3 2002Christoph H. Loch Although most companies recognize the importance of R&D for future competitiveness, they often struggle to assess its contribution to the organization. Performance measurement in R&D is particularly difficult because (1) effort levels may not be observable, (2) project success is uncertain, influenced by uncontrollable factors, and (3) success can be assessed only after long delays, or it accrues to other units of the organization. Based on existing literature on the problem, we developed a performance measurement system for the process technology research group of an industrial company. This measurement system systematically supported the business strategy. Moreover, the measures were adjusted for different project profiles: short-versus long term, hardware versus software, routine support services versus breakthrough ideas and knowledge development. The contribution of this article is a description of the process of developing and implementing a comprehensive performance measurement system in a company, based on previous performance management research, and supporting the company's strategy. It is noteworthy that the system was implemented in a research group (as opposed to development), where the measurement problems are the most severe. [source] MULTIPLE FACILITIES, STRATEGIC SPLITTING AND VERTICAL STRUCTURES: STABILITY, GROWTH AND DISTRIBUTION RECONSIDERED,THE MANCHESTER SCHOOL, Issue 5 2006DAN COFFEY This paper explores comparative cost structures when large firms split operations between separate production facilities in a way that puts pressure on wage rates and worker effort levels: one example of a ,divide and rule' strategy. It differentiates horizontal structures of this kind based on requirements for stability in a context of growing aggregate production vis-à-vis wages and effort. The analysis is formulated within a more general perspective that also considers vertical structures. It considers the implications for contemporary policy debates on desirable industrial forms, and concludes with a discussion of factors that might limit the scope for policies intended to promote industrial stability and redistribution via existing production networks. [source] | ||||||||||