Abstract

http://ssrn.com/abstract=2290373
 
 

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Efficiency in General Agency Models with Imperfect Public Monitoring


Anqi Li


Washington University in Saint Louis

December 1, 2014


Abstract:     
In T-period agency relationships between a risk-neutral principal and a risk-averse agent where signals can depend on past actions and exhibit serial correlation, near-efficiency obtains when T is large if the monitoring technology satisfies two basic properties: concentration of measure and informativeness. The tension between these conditions is used to determine the boundary at which asymptotic efficiency does and does not obtain in agency models with frequent actions. Results deepen and extend our understanding of varying efficiency results in the agency literature, quantify the value of knowing details of the monitoring technology and help solve incentive issues when the monitoring technology is highly persistent.

Number of Pages in PDF File: 27

Keywords: dynamic agency; efficiency; robust incentives

JEL Classification: D86

working papers series





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Date posted: July 6, 2013 ; Last revised: December 13, 2014

Suggested Citation

Li, Anqi, Efficiency in General Agency Models with Imperfect Public Monitoring (December 1, 2014). Available at SSRN: http://ssrn.com/abstract=2290373 or http://dx.doi.org/10.2139/ssrn.2290373

Contact Information

Anqi Li (Contact Author)
Washington University in Saint Louis ( email )
Department of Economics
One Brookings Drive
St. Louis, MO 63130
United States
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