We characterise the optimal demand and supply
for favours in a dynamic principal-agent model of
joint production, in which heterogenous project
opportunities are stochastically generated and
publicly observed upon arrival. Our results
characterise the optimal dynamic contract, and we
establish that the principal's supply of favours (the
production of projects that bene_t the agent but not
the principal) is backloaded, while the principal's
demand for favours (the production of projects that
bene_t the principal but not the agent) is
frontloaded. Furthermore, we provide an exact
construction of the optimal contract when project
opportunities follow a Markov process.
Jean Guillaume Forand received his Ph.D. in
Economics from the University of Toronto. He
is currently a faculty member at the
Department of Economics, University of
Waterloo. Earlier in his career he held
visiting positions at the Wallis Institute
for Political Economy at the University of
Rochester, as well as at the Johns Hopkins
University. He is part of theMiacro Theory
Reading Group which focuses on a range of
topics, including game theory. Dr. Forand's
main research interests are in microeconomic
theory, as well as in political economy.
This event is organized jointly by the MS2Discovery Institute and the Laurier Department of Economics at the Lazaridis School of Business & Economics.
Contact at the MS2Discovery Research Institute: Maria Gallego (Host of the speaker, Tecton 8: Econometrics and Quantitative Approaches to Economics, Business and Political Science
Contact at the MS2Discovery Research Institute: Maria Gallego (Host of the speaker, Tecton 8: Econometrics and Quantitative Approaches to Economics, Business and Political Science
Refreshments will be provided
