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Agent Problem (agent + problem)
Selected AbstractsPrincipal-Agent Problems in Humanitarian Intervention: Moral Hazards, Adverse Selection, and the Commitment DilemmaINTERNATIONAL STUDIES QUARTERLY, Issue 4 2009Robert W. Rauchhaus A number of recent studies have concluded that humanitarian intervention can produce unintended consequences that reduce or completely undermine conflict management efforts. Some analysts have argued that the incentive structure produced by third parties is a form of moral hazard. This paper evaluates the utility of moral hazard theory and a second type of principal-agent problem known as adverse selection. Whereas moral hazards occur when an insured party has an opportunity to take hidden action once a contract is in effect, adverse selection is the result of asymmetric information prior to entering into a contract. Failing to distinguish between these two types of principal-agent problems may lead to policy advice that is irrelevant or potentially harmful. Along with introducing the concept of adverse selection to the debate on humanitarian intervention, this study identifies a commitment dilemma that explains why third parties operating in weakly institutionalized environments may be unable to punish groups that take advantage of intervention. [source] Risk-Taking Incentives: A Review of the LiteratureJOURNAL OF ECONOMIC SURVEYS, Issue 1 2005Richard Windram Abstract., Incentive structures affect people's decisions. But what are the implications of the resulting choices that people make for the level of risk within the economy? This paper reviews the literature in this area and attempts to draw out practical work that can be taken forward in assessing risk-taking incentives in the UK. Understanding the principal,agent problem is key to explaining many of the incentive structures that emerge. The paper provides an exposition of this before considering its implications in the managerial and financial markets. Within both these markets the paper considers how incentive structures alter principals' behaviour, before considering possible solutions to the common problem of asymmetric information. The paper concludes that the implications for risk-taking are unclear, as incentive structures can lead to both increased and decreased risk-taking. It therefore makes a number of suggestions for future research into the effect of incentive structures in existence in the UK. [source] An agency analysis of church,pastor relationsMANAGERIAL AND DECISION ECONOMICS, Issue 6 2001Charles Zech Incentives are critical to the study of economics. But do they work in non-traditional economic settings, such as religious organizations, in a manner consistent with economic theory? This study considers the agency relationship between churches and their clergy. This paper contends that pastor compensation is not typically tied directly to performance, but rather indirectly through promotion tournaments. Pastors whose performance is recognized as being exceptional are rewarded by being called to larger, more prestigious congregations. Given the difficulty of observing and measuring pastor performance this represents a sensible solution to the church,pastor principal,agent problem. Copyright © 2001 John Wiley & Sons, Ltd. [source] A COMPLETE THEORY OF COMPARATIVE STATICS FOR DIFFERENTIABLE OPTIMIZATION PROBLEMSMETROECONOMICA, Issue 1 2006M. Hossein Partovi ABSTRACT A new comparative statics formalism using generalized compensated derivatives is presented that, in contrast to existing methodologies, directly yields constraint-free semidefiniteness results for any differentiable, constrained optimization problem. The formalism provides a natural and powerful method of constructing comparative statics results, free of constraints and unrestricted in scope. New results on envelope relations, invariance conditions, rank inequalities and non-uniqueness are derived that greatly extend their utility and reach. The methodology is illustrated by deriving the comparative statics of multiple linear constraint utility maximization models and the principal-agent problem with hidden actions, both highly nontrivial and hitherto unsolved problems. [source] Policing the Bargain: Coalition Government and Parliamentary ScrutinyAMERICAN JOURNAL OF POLITICAL SCIENCE, Issue 1 2004Lanny W. Martin Policymaking by coalition governments creates a classic principal-agent problem. Coalitions are comprised of parties with divergent preferences who are forced to delegate important policymaking powers to individual cabinet ministers, thus raising the possibility that ministers will attempt to pursue policies favored by their own party at the expense of their coalition partners. What is going to keep ministers from attempting to move policy in directions they favor rather than sticking to the "coalition deal"? We argue that parties will make use of parliamentary scrutiny of "hostile" ministerial proposals to overcome the potential problems of delegation and enforce the coalition bargain. Statistical analysis of original data on government bills in Germany and the Netherlands supports this argument. Our findings suggest that parliaments play a central role in allowing multiparty governments to solve intracoalition conflicts. [source] Principal-Agent Problems in Humanitarian Intervention: Moral Hazards, Adverse Selection, and the Commitment DilemmaINTERNATIONAL STUDIES QUARTERLY, Issue 4 2009Robert W. Rauchhaus A number of recent studies have concluded that humanitarian intervention can produce unintended consequences that reduce or completely undermine conflict management efforts. Some analysts have argued that the incentive structure produced by third parties is a form of moral hazard. This paper evaluates the utility of moral hazard theory and a second type of principal-agent problem known as adverse selection. Whereas moral hazards occur when an insured party has an opportunity to take hidden action once a contract is in effect, adverse selection is the result of asymmetric information prior to entering into a contract. Failing to distinguish between these two types of principal-agent problems may lead to policy advice that is irrelevant or potentially harmful. Along with introducing the concept of adverse selection to the debate on humanitarian intervention, this study identifies a commitment dilemma that explains why third parties operating in weakly institutionalized environments may be unable to punish groups that take advantage of intervention. [source] Fixed Wages and Bonuses in Agency Contracts: The Case of a Continuous State SpaceJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 5 2006MARIA RACIONERO In this paper, we extend the state-contingent production approach to principal,agent problems to the case where the state space is an atomless continuum. The approach is modelled on the treatment of optimal tax problems. The central observation is that, under reasonable conditions, the optimal contract may involve a fixed wage with a bonus for above-normal performance. This is analogous to the phenomenon of "bunching" at the bottom in the optimal tax literature. [source] | |||||||||||||