Objectif
The course will focus on basic building blocks in the Theory of Incentives, with applications to the firm, organizations and labor contracts.
Plan
Part 1. The Principal-Agent Model under Pure Moral Hazard
Grossman and Hart’s model — The first-order approach — Holmström’s Informativeness Principle — The Multitask Agent Problem.
Part 2. The Principal-Agent Problem under Pure Adverse Selection
Introduction to Mechanism Design — Revelation Principle — Informational Rents and Second-best distortions — Countervailing incentives — Application to Optimal Regulation— Baron and Myerson’s Model — Laffont and Tirole’s Model.
Part 3. Incentives in Teams
Incentives in Teams: Coordination and Authority — Teams with incomplete information — Yardstick Competition — Tournaments
Part 4. Introduction to Dynamic Problems
Implicit or Self-enforcing contracts — Efficiency Wages à la Shapiro-Stiglitz — MacLeod and Malcomson’s Complete Information Model — Theory of Career Concerns — Promotions and Hierarchies — Implicit and Explicit Incentives combined — Relational Contracts.
Références
Patrick Bolton and Mathias Dewatripont (2004), Contract Theory, MIT Press, Cambridge, Mass.
Jean-Jacques Laffont and David Martimort (2001), The Theory and Incentives, Princeton University Press, Princeton.
Bernard Salanié (2005), The Economics of Contracts: a Primer, new edition, MIT Press.
Edward P. Lazear (1995), Personnel Economics, MIT Press, Cambridge, Massachusetts.