This paper considers a moral hazard problem where the agent can choose any output distribution with a support in a given compact set. The agent's effort-cost is smooth and increasing in first-order stochastic dominance. To analyze this model, we develop a generalized notion of the first-order approach applicable to optimization problems over measures. We demonstrate each output distribution can be implemented and identify those contracts that implement that distribution. These contracts are characterized by a simple first-order condition for each output that equates the agent's marginal cost of changing the implemented distribution around that output with its marginal benefit. Furthermore, the agent's wage is shown to be increasing in output. Finally, we consider the problem of a profit-maximizing principal and provide a first-order characterization of principal-optimal distributions.
Biography
Professor Szentes received his PhD from Boston University in 2002. He was an Assistant Professor at the University of Chicago, where he got tenure in 2008. He was a professor at the University College London between 2008 and 2010 and at the London School of Economics between 2010 and 2023. His main research interests are Microeconomics and Game Theory.
Research Interest
- Microeconomics
- Game Theory
Selected Publications
- “Flexible Moral Hazard Problems,”
Econometrica, 2024, 92(2), 387-409. - “On the coevolution of cooperation and social institutions,” (with Verónica Salazar)
European Economic Review, 2024(161), 104620.
- “Smart Contract and the Coase Conjecture,” (with Alkis Georgiadis-Harris and Thomas Brzustowski)
American Economic Review, 2023(113), 1334-1359.
- “Learning Before Trading: On the Inefficiency of Ignoring Free Information,” (with Doron Ravid and Anne-Katrin Roesler)
Journal of Political Economy, 2022(130), 346-387.
- “Optimal Monitoring Design,” (with George Giorgiadis)
Econometrica, 2020(88), 2075-2107.
- “Information Design in the Hold-up Problem,” (with Daniele Condorelli)
Journal of Political Economy, 2020(128), 681-709.
- “Buyer-Optimal Learning and Monopoly Pricing,” (with Anne-Katrin Roesler)
American Economic Review, 2017(107), 2072-2080.
- “Contractible Contracts in Common Agency Problems.”
Review of Economic Studies, 2015(82), 391-422.
- “A Biological Theory of Social Discounting,” (with Arthur Robson).
American Economic Review, 2014(104), 3481-3497.
- “On the Market for Venture Capital,” (with Boyan Jovanovic).
Journal of Political Economy, 2013(121), 493-527.
- “Spontaneous Discrimination,” (with Marcin Peski).
American Economic Review, 2013(6), 2412-2436.
- “Definable and Contractible Contacts,” (with Michael Peters).
Econometrica, 2012(1), 362-411.
- “Evolution of Time Preference by Natural Selection: Comment,” (with Arthur Robson),
American Economic Review, 2008(98), 1178-1188.
- “Equilibrium Default Cycles,” (with Natalia Kovrijnykh),
Journal of Political Economy, 2007(115), 403-446.
- “Optimal Information Disclosure in Auctions,” (with Peter Eso),
Review of Economic Studies, 2007(74), 705-731.
Recent Publications
30Mar
30 Mar 2024
Econometrica