Contract Theory literatures

The following theories relate very close to each other:

contract theory, incentives theory, principal-agent theory, agency theory and mechanism design

Moreover, all of them also deal with the following general theories:

game theory, theory of organizations, and information economics

I will gather some introductions of contract theory… and some lecture references in this post.

(I am recently learning laffont’s textbook which has a good introduction of contract theory)

+ 契約理論ミクロ経済学第3の理論への道程 伊藤秀史

 

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OLIVER HART AND BENGT HOLMSTRÖM: CONTRACT THEORY Nobel prize introdution

contract → mitigate/resolve conflicts of interests = obstacle to human cooperation ← by providing incentives to exploit the prospective gains from cooperation

adverse selection ← asymmetric info at/before contracting
– Mirrlees and Vickrey: economic theory of incentives under asymmetric information (1996 Prize)
– Akerlof, Spence, and Stiglitz:  analyses of markets with asymmetric information (2001)
– Hurwicz, Maskin, and Myerson: foundations of mechanism-design theory (2007)
– Tirole: moral hazard & adverse selection for the analysis of market power and regulation (2014)

moral hazard ← the principal cannot directly observe the agent’s actions / cannot measure performance precisely and timely
complete contracts that paying for performance: Holmstrom (1979, 80s with Milgrom) =informativeness principle, dynamic moral hazard, multi-tasking …
→ the optimal compensation schedule trades-off incentive provision against risk-sharing

incomplete contracting: measure and verify performance ex post + write sufficiently detailed contracts ex ante = not possible
→ Oliver Hart with Sanford Grossman & John Moore: allocation of decision rights [ ← determined by property rights/ownership → generate bargaining power ] → incentives
→ applied to corporate governance and organizational economics issues:
(costs and benefits of mergers, the distribution of authority within organizations, whether or not providers of public services should be privately owned, and how outside owners can control a company inside managers through the design of corporate governance and capital structure)

# contract theory does not rely on agents being completely rational and selfish ← applied to unselfish or boundedly rational agents, or agents with intrinsic non-material (psychological and sociological) motivations

……

 

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Contract Theory – Bolton & Dewatripont Oslo, August 2006

mostly stresses “classic papers”

General References

– * Bolton, P. and M. Dewatripont (2005), Contract Theory, Cambridge, Mass: MIT Press (especially chapter 1: Introduction).
– Hart, O. (1995), Firms, Contracts and Financial Structure, Oxford, England: Oxford University Press.
– Laffont, J.-J. and D. Martimort (2002), The Theory of Incentives: The Principal-Agent Problem. New York: Princeton University Press.
– Milgrom, P. and J. Roberts (1992). Economics, Organization and Management.
– Englewood Cliffs, N.J.: Prentice-Hall. Salanie, B. (1997), The Economics of Contracts: A Primer. MIT Press.

1. Moral hazard: static one principal, one agent.

B&D, Chapter 4. Moral Hazard & 6. Multidimensional incentive problems
– * Holmstrom, B. (1979). “Moral Hazard and Observability.” Bell Journal of Economics: 10:74-91.

– * Holmstrom, B. and P. Milgrom (1990), “Multi-Task Principal-Agent Analyses,” Journal of Law, Economics and Organization, 7, Special Issue.

– Grossman, S. and O. Hart (1983), “An Analysis of the Principal-Agent Problem”, Econometrica 51: 7-45.
– Jewitt, I. (1988), “Justifying the First-Order Approach to Principal-Agent Problems”, Econometrica 56: 1177-90.
– Mirrlees, J. (1999), “The Theory of Moral Hazard and Unobservable Behavior”, Review of Economic Studies 66: 3-21.
– Rogerson, W. (1985), “The First-Order Approach to Principal-Agent Problems”, Econometrica 53: 1357- 68.

2. Moral hazard in teams, tournaments and hierarchies.

B&D, Chapter 8. Multiagent Moral Hazard and Collusion
– * Dewatripont, M. and J. Tirole (1999), “Advocates,” Journal of Political Economy, 107(1): 1-39. Green, J. and N. Stokey (1983), “A Comparison of Tournaments and Contracts.” Journal of Political Economy, 91: 349-64.

– * Holmstrom, B. (1982). “Moral Hazard in Teams.” Bell Journal of Economics: 13:324-40.

– Calvo, G. and S. Wellisz (1978), “Supervision, Loss of Control, and the Optimum Size of the Firm,” Journal of Political Economy 75: 123-38.
– Holmstrom, B. and P. Milgrom (1990), “Regulating Trade Among Agents,” Journal of Institutional and Theoretical Economics, 146(1): 85-105.
– Itoh, H. (1991), “Incentives to Help in Multi-Agent Situations,”
– Econometrica, 59(3): 611-636. Lazear, E. and S. Rosen. (1981). “Rank-Order Tournaments as Optimum Labor Contracts.” Journal of Political Economy, 89: 841-864.
– Legros, P. and S. Matthews (1993), “Efficient and Nearly Efficient Partnerships”, Review of Economic Studies 6): 599-611.
– Qian, Y. (1994), “Incentives and Loss of Control in an Optimal Hierarchy”, Review of Economic Studies 61: 527-44.

3. Dynamic moral hazard and career concerns.

B&D, Chapter 10. Dynamic Moral Hazard
– * Chiappori, P.A., I. Macho, P. Rey and B. Salanie (1994), “Repeated Moral Hazard: The Role of Memory, Commitment and the Access to Credit Markets,” European Economic Review 38(8), 1527-53.

– * Holmstrom, B. (1982). “Managerial Incentive Problems–A Dynamic Perspective.” Republished in Review of Economic Studies 66 (1999): 169-82.
– * Holmstrom, B. and P. Milgrom (1987), “Aggregation and Linearity in the Provision of Intertemporal Incentives,” Econometrica, 55(2) p 303-328.

– Dewatripont, M., I. Jewitt, and J. Tirole. (1999). “The Economics of Career Concerns, Parts I & II.” Review of Economic Studies 66: 183-217.
– Fudenberg, D., Holmstrom, B. and P. Milgrom (1990), “Short Term Contracts and Long Term Agency Relationships,” Journal of Economic Theory, 51(1): 1-31.
– Fudenberg, D., and J. Tirole (1990). “Moral Hazard and Renegotiation in Agency Contracts,” Econometrica 58(6): 1279-1319.
– Hermalin, B. and M. Katz. (1991). “Moral Hazard and Verifiability: The Effects of Renegotiation in Agency.” Econometrica, 59(6): 1735-1753.  
– Radner, R. (1981), “Monitoring Cooperative Agreements in a Repeated Principal-Agent Relationship,” Econometrica, 49(5): 1127-48.
– Rogerson, W. (1985), “Repeated Moral Hazard,” Econometrica, 53: 69-76.

4. Static adverse selection.

B&D, Chapter 2. Adverse selection: screening & 6.
– * Maskin, E. and J. Riley (1984), “Monopoly with Incomplete Information,” Rand Journal of Economics, 15: 171-96.

– * Tirole, J. (1986), “Hierarchies and Bureaucracies: On the Role of Collusion in Organizations” Journal of Law, Economics and Organization, II(2):181-214.

– Adams, W. and J. Yellen (1976), “Commodity bundling and the burden of monopoly,” Quarterly Journal of Economics 90: 475-498.
– Baron, D. and R. Myerson (1982), “Regulating a Monopolist with Unknown Costs,” Econometrica, 50(4): 911-30.
– Laffont, J-J and J. Tirole (1986), “Using Cost Observation to Regulate Firms,” Journal of Political Economy, 94(3).
– Mirrlees, J. (1971), “An exploration in the theory of optimum income taxation,” Review of Economic Studies 38: 175-208.
– Mussa, M. and S. Rosen (1978), “Monopoly and Product Quality,” Journal of Economic Theory, 18: 301- 317.
– Rochet, J.C. and L. Stole (2003), “The Economics of Multidimensional Screening,” in M. Dewatripont, L. Hansen and S. Turnovsky (Eds), Advances in Economics and Econometrics, Cambridge: Cambridge University Press.
– Tirole, J. (1992), “Collusion and the Theory of Organizations,” in J.-J. Laffont (ed.), Advances in Economic Theory: Sixth World Congress, Volume 2, Econometric Society, Cambridge: Cambridge University Press, 151-206.

5. Mechanism design and auctions.

B&D, Chapter 7. Multiagent adverse selection
– * Myerson, R. (1981), “Optimal Auction Design,” Mathematics of Operations Research, 6: 58-73.

– * Myerson, R. and M. Satterthwaite (1983) , “Efficient Mechanisms for Bilateral Trading,” Journal of Economic Theory, 29: 265-281.

– Cremer, J. and R. McLean (1988), “Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions,” Econometrica 56, 1247-1258.
– d’Aspremont, C. and L. Gerard-Varet (1979), “Incentives and Incomplete Information,” Journal of Public Economics, 11: 24-45.
– Maskin, E. and J. Riley (1984), “Optimal Auctions with Risk-Averse Buyers,” Econometrica 52(6): 1473-1518.
– Milgrom, P. and R. Weber (1982), “A Theory of Auctions and Competitive Bidding,” Econometrica 50(5):1089-1122. 

6. Dynamic adverse selection.

B&D, Chapter 9. Dynamic Adverse Selection
– * Dewatripont, M. and Maskin, E. (1995), “Credit and Efficiency in Centralized and Decentralized Economies,” Review of Economic Studies 62(4), 541-555.

– * Townsend, R. (1982), “Optimal Multiperiod Contracts and the Gain from Enduring Relationships under Private Information,” Journal of Political Economy, 90, 1166-86.

– Dewatripont, M. (1989), “Renegotiation and Information Revelation over Time: The Case of Optimal Labor Contracts,” Quarterly Journal of Economics, 104: 589-619.
– Dewatripont, M. and Maskin, E. (1990), “Contract Renegotiation in Models of Asymmetric Information,” European Economic Review, 34(2-3): 311-321.
– Diamond, D. (1989), “Reputation Acquisition in Debt Markets,” Journal of Political Economy, 97(4), 828-62.
– Hart, O. and J. Tirole (1988), “Contract Renegotiation and Coasian Dynamics,” Review of Economic Studies, 55: 509-540.
– Laffont, J.-J. and J. Tirole (1988), “The Dynamics of Incentive Contracts,” Econometrica, 56(5): 1153- 1175.
– Laffont, J.-J. and J. Tirole (1990), “Adverse Selection and Renegotiation in Procurement,” Review of Economic Studies, 57: 597-625.

7. Implementation, incomplete contracts and authority.

B&D, Chapter 11. Incomplete Contracts & 12. Foundations of contracting with unverifiable information.
* Aghion, P., and P. Bolton (1992), “An ‘Incomplete Contracts’ Approach to Financial Contracting,” Review of Economic Studies, 59:473-94.

* Aghion, P., M. Dewatripont and P. Rey (2002), “On Partial Contracting,” European Economic Review.
* Aghion, P. and J. Tirole (1997), “Formal and Real Authority in Organizations,” Journal of Political Economy, 105(1), 1-29.
* Grossman, S. and O. Hart (1986), “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,” Journal of Political Economy, 94(4): 691-719.
* Hart, O. and J. Moore (1999), “Foundations of Incomplete contracts,” Review of Economic Studies, 66(1): 115-38.
* Hart, O. and J. Moore (1999), “Foundations of Incomplete contracts,” Review of Economic Studies, 66(1): 115-38.
* Maskin, E. (1999) “Nash Equilibrium and Welfare Optimality,” Review of Economic Studies, 66, 23-38.
* Tirole, J. (1999), “Incomplete Contracts: Where Do We Stand?” Econometrica, 67(4): 741-81

– Aghion, P., M. Dewatripont and P. Rey. (1994). “Renegotiation Design with Unverifiable Information.” Econometrica 62: 257-282.
– Che, Y. and D. Hausch. (1999). “Cooperative Investments and the Value of Contracting.” American Economic Review 89: 125-47.
– Dewatripont, M. (2001), “Authority,” Walras-Bowley Lecture presented at the 2001 North-American Meeting of the Econometric Society.
– Hart, O. (1995). Firms, Contracts, and Financial Structure. Oxford University Press.
– Hart, O. and J. Moore. (1988). “Incomplete Contracts and Renegotiation.” Econometrica 56: 755-85.
– Hart, O. and J. Moore (1990), “Property Rights and the Nature of the Firm,” Journal of Political Economy, 98 (6): 1119-1158.
– Legros, P. and A. Newman (2002), “Competing for Ownership,” mimeo. 
– Maskin, E. and J. Tirole (1999), “Unforeseen Contingencies and Incomplete Contracts,” Review of Economic Studies.
– Maskin, E. and J. Moore (1999), “Implementation and Renegotiation,” Review of Economic Studies.
– Moore, J. and R. Repullo (1988) “Subgame Perfect Implementation,” Econometrica, 56: 1191-1220.
– Noldeke, G. and K. M. Schmidt. (1995). “Option Contracts and Renegotiation: A Solution to the Hold-up Problem.” Rand Journal of Economics, 26(2): 163-179.
– Segal, I. (1999), “Complexity and Renegotiation: A Foundation for Incomplete Contracts,” Review of Economic Studies.

 

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Contract Theory – Simon Board and Moritz Meyer-ter-Vehn, ucla, 2009

– tools and techniques used in models of moral hazard, screening and incomplete contracting
– applications from industrial organisation, corporate finance, public finance, personnel economics, and many other areas
– recent innovations in the theory of relational contracts and dynamic signalling

Books and Manuscripts

Bolton and Dewatripont (2005), Contract Theory, MIT Press.
Laffont and Martimort (2002), The Theory of Incentives, PUP.
Mas-Colell, Whinston and Green (1995), Microeconomic Theory, OUP.
Salanie (1997), The Economics of Contracts: A Primer, MIT Press.
Segal and Tadelis (2002), Lectures on Contract Theory, Unpublished, Stanford University.

1. Useful Techniques

Topics: lattices, supermodularity, monotone comparative statics, comparing equilibria, envelope theorems, stochastic orders.

– Topkis (1998), Supermodularity and Complimentarity, PUP.
– Milgrom and Segal (2002), “Envelope Theorems for Arbitrary Choice Sets,”
– Econometrica. Shaked and Shanthikumar (2007), Stochastic Orders, Springer.
– Milgrom (1981), “Good News and Bad News: Representation Theorems and Applications,” Bell Journal.
– Karlin and Rinott (1980),“Classes of Ordering of Measures and Related Correlation Inequalities I: Multivariate Totally Positive Distributions,” Journal of Multivariate Analysis.
– Karlin and Rubin (1956), “The Theory of Decision Procedures for Distributions with Monotone Likelihood Ratio,” Annals of Mathematical Statistics.
– Amir, (2003), “Supermodularity and Complementarity in Economics: An Elementary Survey.”

2. Moral Hazard: One Agent

Topics: two action model, continuous action model, optimal linear contracts, comparative performance evaluation, multitasking, private evaluations, debt contracts.

– Bolton and Dewatripont, Chapters 4 and 6.2.
– Milgrom and Roberts (1992), Economics, Organization and Management, Prentice Hall.
– Holmstrom (1979), “Moral Hazard and Observability,”
– Bell Journal. Rogerson (1985), “The First-Order Approach to Principal-Agent Problems,” Econometrica.
– Mirrlees (1999), “The Theory of Moral Hazard and Unobservable Behaviour: Part I,” Review of Economic Studies.
– MacLeod (2003), “Optimal Contracting with Subjective Evaluation,” American Economic Review.
– Innes (1990), “Limited Liability and Incentive Contracting with Ex-ante Action Choices,” Journal of Economic Theory.
– Holmstrom and Milgrom (1991), “Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design,” Journal of Law, Economics, & Organization

3. Moral Hazard: Many Agents

Topics: tournaments, partnerships, comparative performance evaluation.

– Bolton and Dewatripont, Chapter 8.
– Lazear and Rosen (1981), “Rank-Order Tournaments as Optimum Labor Contracts,” Journal of Political Economy.
– Holmstrom (1982), “Moral Hazard in Teams,” Bell Journal.

4. Moral Hazard: Dynamics

Topics: repeated moral hazard, justifying simple contracts, renegotiation, career concerns.

– Bolton and Dewatripont, Chapter 10.
– Rogerson (1985), “Repeated Moral Hazard,” Econometrica.
Fudenburg, Holmstrom and Milgrom (1990), “Short-term Contracts and Long-term Agency Relationships,” Journal of Economic Theory.
– Holmstrom and Milgrom (1987), “Aggregation and Linearity in the Provision of Intertemporal Incentives,”
– Econometrica. Radner (1985), “Repeated Principal-Agent Games with Discounting,” Econometrica
– Hermalin and Katz (1991), “Moral Hazard and Verifiability: The Effects of Renegotiation in Agency,” Econometrica.
– Fudenberg and Tirole (1990), “Moral Hazard and Renegotiation in Agency Contracts,” Econometrica.
– Holmstrom (1999), “Managerial Incentive Problems: A Dynamic Perspective,” Review of Economic Studies.

5. Relational Contracts

Topics: Bilateral contracts, multilateral contracts, embedding relational contracts in markets.

– Abreu, Pearce and Stacchetti (1986), “Optimal Cartel Equilibria with Imperfect Monitoring,” Journal of Economic Theory.
– Shapiro and Stiglitz (1984), “Equilibrium Unemployment as a Worker Discipline Device,” American Economic Review.
– Macleod and Malcomson (1989), “Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment,” Econometrica.
– Macleod and Malcomson (1998), “Motivation and Markets,” American Economic Review.
– Levin (2003), “Relational Incentive Contracts,” American Economic Review.
– Thomas and Worrall (1988), “Self-Enforcing Wage Contracts,” Review of Economic Studies.
– Thomas and Worrall (1994), “Foreign Direct Investment and the Risk of Expropriation,” Review of Economic Studies.

6. Mechanism Design: One Agent

Topics: revelation principle, discrete type problems, continuous type problems, ironing, credit rationing, implicit labour contracts, regulation, insurance, labour contracts, contracts as barriers to entry, costly state verification.

– Bolton and Dewatripont, Chapter 2.
– Laffont and Martimort, Chapters 2 and 3.
– Myerson (1982), “Optimal Coordination Mechanisms in Generalized PrincipalAgent Problems,” Journal of Mathematical Economics.
– Maskin and Riley (1984), “Monopoly with Incomplete Information,” RAND Journal of Economics.
– Mussa and Rosen (1978), “Monopoly and Product Quality,” Journal of Economic Theory.
– Baron and Myerson (1982), “Regulating a Monopolist with Unknown Costs,” Econometrica

7. Mechanism Design: Many Agents

Topics: optimal auctions, bilateral trading.

– Mas–Collel, Whinston and Green, Chapter 23.
– Bolton and Dewatripont, Chapter 7.
– Myerson (1981), “Optimal Auction Design,” Mathematics of Operations Research.
– Krishna (2002), Auction Theory, Academic Press. Milgrom (2004), Putting Auction Theory to Work, CUP.
– Myerson and Satterthwaite (1983), “Efficient Mechanisms for Bilateral Trading,” Journal of Economic Theory.
– Cremer and McLean (1988), “Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist when Demands are Interdependent,” Econometrica.
– Neeman (2004), “The Relevance of Private Information in Mechanism Design ”, Journal of Economic Theory.

8. Mechanism Design: Dynamics

Topics: commitment solutions, no commitment, renegotiation, entry of new agents, durable goods monopoly, consumption smoothing.

– Bolton and Dewatripont, Chapter 9.
– Laffont and Martimort, Chapter 8.
– Baron and Besanko (1984), “Regulation and Information in a Continuing Relationship,” Information Economics and Policy.
– Courty and Li (2000), “Sequential Screening,” Review of Economic Studies.
– Board (2007), “Durable–Goods Monopoly with Varying Demand,” Review of Economic Studies.
– Segal (2003), “Optimal Pricing Mechanisms with Unknown Demand,” American Economic Review.
– Thomas and Worrall (1990), “Income Fluctuation and Asymmetric Information: An Example of a Repeated Principal-Agent Problem,” Journal of Economic Theory.
– Bulow (1982), “Durable-Goods Monopolists,” Journal of Political Economy.
– Gul, Sonnenschein and Wilson (1986), “Foundations of Dynamic Monopoly and the Coase Conjecture,” Journal of Economic Theory.
– Ausubel and Deneckere (1989), “Reputation in Bargaining and Durable Goods Monopoly,” Econometrica.
– Fuchs and Skrzypacz (2007), “Bargaining with Arrival of New Traders or New Information,” Working Paper, Chicago and Stanford GSB.
– Hart and Tirole (1988), “Contract Renegotiation and Coasian Dynamics,” Review of Economic Studies.
– Laffont and Tirole (1988), “The Dynamics of Incentive Contracts,” Econometrica.

9. Mixed Models

Topics: false moral hazard (optimal taxation), adverse selection and moral hazard.

– Bolton and Dewatripont, Chapter 6.3.
– Laffont and Martimort, Chapter 7.
– Mirrlees (1971), “An Exploration in the Theory of Optimum Income Taxation ”, Review of Economic Studies.
– Laffont and Tirole (1986), “Using Cost Observation to Regulate Firms,” Journal of Political Economy.
– McAfee and McMillan (1987), “Competition for Agency Contracts,” RAND Journal of Economics.

 

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CONTRACT THEORY – Jens Josephson, Stockholm University, 2012 

– an overview of important areas of the economics of information.
– classic papers of contract design under asymmetric information (moral hazard and adverse selection models), mechanism design and auctions, and reputation

General Treatments

– *Bolton, P. and M. Dewatripont (2005), Contract Theory. The MIT Press.
– * Mas-Collel A., Whinston, M.D., and J.R. Green (1995), Microeconomic Theory, Oxford University Press.

-Bergin, J. (2005). Microeconomic Theory. Oxford University Press. 
– Fudenberg and Tirole (1991), Game Theory. The MIT Press.
– Jehle, P. and P. J. Reny (2000), Advanced Microeconomic Theory, 2nd ed., Addison-Wesley.
– Laffont, J-J. and D. Martimort (2002), The Theory of Incentives, Princeton University Press.  
– Osborne and Rubinstein (1994), A Course in Game Theory, MIT Press.
– Perez, Castrillo, D. and Macho Stadler, I. (2001), An introduction to the economics of information, 2nd ed.,
– Oxford University Press. Salanié, Bernard (2005). The Economics of Contracts: A Primer. 2nd ed. Cambridge, MA: MIT Press.

1. Moral Hazard I: Static bilateral

* Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 4: Moral Hazard, and chapter 6.2: Multidimensional incentive problems.
* Holmstrom, B. (1979). “Moral Hazard and Observability.” Bell Journal of Economics 10, 74-91.
* Holmstrom, B. and P. Milgrom (1991), “Multi-Task Principal-Agent Analyses,” Journal of Law, Economics and Organization 7, Special Issue.
– Perez, Castrillo, D. and Macho Stadler, I. (2001), An introduction to the economics of information, 2nd Edition, Oxford University Press. 

2. Moral hazard II:

a) Multiagent

* Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 8: Multiagent Moral Hazard and Collusion.
* Holmstrom, B. (1982). “Moral Hazard in Teams.” Bell Journal of Economics: 13, 324-40. 

b) Dynamic

* Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 10: Dynamic Moral Hazard.
* Chiappori, P.A., I. Macho, P. Rey and B. Salanie (1994), “Repeated Moral Hazard: The Role of Memory, Commitment and the Access to Credit Markets,” European Economic Review 38(8), 1527-53.
* Holmstrom, B. (1982). “Managerial Incentive Problems–A Dynamic Perspective.” Republished in Review of Economic Studies 66 (1999), 169-82.
* Holmstrom, B. and P. Milgrom (1987), “Aggregation and Linearity in the Provision of Intertemporal Incentives,” Econometrica, 55(2), 303-328.
– Sannikov, Y. (2008), “A Continuous-Time Version of the Principal-Agent Problem,” Review of Economic Studies 73(3), 957-984.

3. Adverse Selection I: Screening

* Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 2: Adverse selection: screening, and chapter 6: Multidimensional incentive problems.
* Maskin, E. and J. Riley (1984), “Monopoly with Incomplete Information,” Rand Journal of Economics, 15, 171-96. 
* Riley, J.G. (2001), Silver signals: Twenty-five years of screening and signaling. J Econ Lit 39(2), 432–478.
* Rotschild, M., and J. Stiglitz (1976), “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Information,” The Quarterly Journal of Economics 90(4), 629-649.
– Rochet, J.C. and L. Stole (2003), “The Economics of Multidimensional Screening,” in M. Dewatripont, L. Hansen, and S. Turnovsky (Eds), Advances in Economics and Econometrics, Cambridge University Press.

4. Adverse Selection II:

a) Signaling, and Cheap Talk

* Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 3: Hidden Information, Signaling and chapter 13.1: Markets and Contracts.
* Riley, J.G. (2001), Silver signals: Twenty-five years of screening and signaling. J Econ Lit 39(2), 432–478.

b) Dynamic

* Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 9: Dynamic Adverse Selection.

5. Auctions and Mechanism Design

– * Bolton, P. and M. Dewatripont (2005), Contract Theory, chapter 7: Multiagent adverse selection.
– * Myerson, R. (1981), “Optimal Auction Design,” Mathematics of Operations Research, 6, 58-73.
Jackson, M. (2003), “Mechanism Theory,” mimeo.

6. Reputation 

* Bar-Isaac, H. and S. Tedelis (2008), “Seller Reputation,” Foundations and trends in Microeconomics 4(4), 273-351.
– Bar-Isaac, H. (2003), “Reputation and survival: Learning in a dynamic signalling model”. Review of Economic Studies 70, 231-251.
– Mailath, G. J. and L. Samuelson (2001), “Who wants a good reputation?,” Review of Economic Studies 68, 415–441.
– Holmstrom, B. (1982). “Managerial Incentive Problems–A Dynamic Perspective.” Republished in Review of Economic Studies 66 (1999), 169-82.

7. Various

– Baliga, S. and T. Sjostrom (2012), “The Strategy of Manipulating Conflict,” forthcoming American Economic Review.
– Bolton, P., Freixas, X., and J. D. Shapiro (2012), “The Credit Ratings Game,” Journal of Finance 67(1), 85-112.
– Gayle, G.-L., and R.A. Miller (2009), “Has Moral Hazard Become a More Important Factor in Managerial Compensation?,” American Economic Review 99(5), 1740–69.
– Rayo, L. (2007), “Relational Incentives and Moral Hazard in Teams,” Review of Economic Studies, 74(3), 937-963.
– Hart, O. and J. Moore. (2004),”Agreeing Now to Agree Later: Contracts that Rule Out but do not Rule In.” National Bureau of Economic Research Working Paper No. 10397.
– Levin, J. (2003). “Relational Incentive Contracts,” American Economic Review 93(3), 835-857.
– Tirole, J. (2003) “Inefficient Foreign Borrowing: A Dual- and Common-Agency Perspective.” American Economic Review 93(5), 1678-1702.
– Che, Y.-K., and S.-W. Yoo (2001), “Optimal Incentives for Teams.” American Economic Review 91(3), 525-541.
– Dewatripont, M. and J. Tirole (1999), “Advocates,” Journal of Political Economy, 107(1), 1-39.
– Maskin, E. and J. Tirole (1999), “Unforeseen Contingencies and Incomplete Contracts.” Review of Economic Studies 66, 83-114.
– Aghion, P., and J. Tirole (1997), “Formal and Real Authority in Organizations,” Journal of Political Economy, 105(1), 1-29. 
– Kocherlakota, N. (1996), “Implications of Efficient Risk Sharing without Commitment,” Review of Economic Studies 63, 595-609.
– Laffont, J.-J., and M. Salah Matoussi (1995), “Moral Hazard, Financial Constraints and Sharecropping in El Oulja,” The Review of Economic Studies, 62(3), 381-399.
– Qian, Y. (1994), “Incentives and Loss of Control in an Optimal Hierarchy”, Review of Economic Studies 61, 527-44.
– Lewis T.R., and D.E.M. Sappington (1993), “Ignorance in Agency Problems,” Journal of Economic Theory 61(1), 169-183.
– Crawford, V.P., and J. Sobel (1982) “Strategic Information Transmission.” Econometrica, 50(6), 1431-1451.
– Townsend, R. M. (1979), “Optimal contracts and competitive markets with costly state verification,” Journal of Economic Theory 21(2), 265-293.
– Calvo, G. and S. Wellisz (1978), “Supervision, Loss of Control, and the Optimum Size of the Firm,”Journal of Political Economy 75, 123-38.

 

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2017/07/23 update:

契約理論ミクロ経済学第3の理論への道程 伊藤秀史

新古典派(完全競争市場分析)の完成後、現代ミクロ経済学はおおまかに2つの方向:
1。不完全市場の分析:[1] 少数経済主体間の競争、[2] 情報の非対称性 、[3] 外部性などの市場の失敗の要因の統一した分析(ゲーム理論の進展により)
2。取引形態に分析対象の拡大:(black boxから)企業の組織やマネジメントの分析が経済学的に行われ
=> 契約理論 (contract theory)= 2つの方向で発展した理論群の総称
(standard textbook of CT = Bolton and Dewatripont 2005: theory of [ incentive + information + economic institution ] → contract theory)

1。不完全市場の分析→ [2] asymmetric information

private information = asymmetric information ← 情報の探索の費用+経済主体の分業によって必然的に発生 / その私的情報を利用し利益をえることができるために、個人の開示incentiveはない

取引においてasymmetric information:(Arrow, 1985)
[1] hidden action/moral hazard/agency problem:
初期は競争市場の効率性、今はagency問題により(p)望ましいincentive設計に注目(Holmstrom 1979, Grossman&Hart 1983:標準的な分析枠組みの確定)
[2] hidden information/adverse selection
問題発見から解消するための情報開示、情報伝達の可能性へと移す:a) signaling (Spence 1973) ; b) screening (Rothschild&Stiglitz 1976)
市場からagency問題に移す:auction (Vickrey 1961), mechanism design (Mirrlees l971) → 隠れた情報下での最適契約設計問題の標準的な方法論 (Myerson 1981) (Baron&Myerson 1982)

2。取引形態に分析対象の拡大 → economic institution/organizational structure

firm → agency problem(所有と経営の分離)  → 資本構成の適切設計によって経営者へincentive (Jensen&Meckling 1976)

asymmetric information以外の問題:
Coase: 企業を市場とは異なるルールで機能する資源配分の仕組み、取引費用の違い
取引費用:
a) 取引発生以前に被る事前費用(取引前/取引中の過程で起こりうる状態を探索する費用、取引条項の折衝・起草・明記のための費用など) => incomplete contract
b) 当初到達した合意を履行・遵守していく過程で被る事後費用(取引条項の再交渉や訴訟にかかる費用) => incomplete contract/asset specificity → hold up problem (williamson: 3っ概念に基づいてtransaction cost economicsを体系化し企業の境界を分析) → hold up problem: (Hart&Moore 1988) によって厳密に定式化、(Grossman&Hart 1986)(Hart&Moore l990)hold up緩和から、property rightsをどのように割り当てるのが望ましいかを分析し(property rights approach→企業の境界)

a) + b) => incomplete contract theory + nonverifiability (asy infoでもあるが、TCを強調→契約以外の制度)

Coase以外の「企業は何か」:
[1] Team生産とPrincipalによるmonitoring(ALchian & Demsetz 1972)
[2] → hidden actionを複数 agentからなるteamに拡張(Holmstrom 1982)
[3] 企業をnexus of contractsとみなし(Jensen and Meckling 1976)

3。incentive 
→ 「アメの期待とムチの恐れとを与えて,人を行動(選択・決断 )へと駆り立てるもの」+ 完全競争市場ならincentiveを考慮する必要ない、利己的に行動する各経済主体が自然的に社会の効率的な資源配へ導く/しかし市場の不完全性から経済主体の利己行動が最優状態から乖離、incentive問題発生、incentive設計により効率向上は可能

[1。+ 2。]Contract theory =>「非対称情報・契約の不完備性の下でのincentive設計」
3 fundamental models: a) moral hazard; b) adverse selection; c) hold up
典型的な問題以外: ラチェット効果、ソフトな予算制約、チーム生産など、さまざまなincentive問題が契約理論によって分析
Incentive設計契約設計財産権や権限の配分組織構造などにより、incentive compatibilityを達成
(pとaの契約合意のプロセスについては,「交渉の余地のない(take or leave)」方式が仮定され、いわば寡占市場でのStackelberg competitionと同様の,特定の展開形ゲームを仮定するわけだが,この仮定によって,契約理論は交渉プロセスを単純化し,交渉ゲームの理論がもたらす諸問題(交渉プロセスを特定化する必要性,複数均衡など)を回避してincentive設計の問題に集中する
+participation condition/individual rationality => 契約理論の基本モデルは部分均衡をとる発展 => 結果として,それが少数経済主体間の取引関係を分析する理論であることから,特定の展開形ゲームを分析するゲーム理論の一応用分野とみなされることがある/実際,契約理論の基本モデルの分析は,ゲーム理論的にいえば,pとaの間の展開形ゲームの部分ゲーム完全均衡(hidden actionの場合)もしくはベイズ完全均衡(hidden infoの場合))
=> 条件付き最適化が分析されるという点では契約理論は価格理論に近い(契約理論は価格埋論を拡張した理論として位置付けも可能)→ つまり価格理論で分析される市場「価格」を,契約理論では状態や義務に条件付けられた「契約」に拡張し、取引価格が数量などの条件によって変わる「非線形価格」の分析

### (as we have already told by Coase that every market has its transaction costs, can we actually imagine/describe a so-called complete competitive market in general sense? And if incentive problem comes from the incompleteness of market, where does this incompleteness come from? Surely it comes from asymmetric information, but incentive problems also occur in an individual sense. I’d rather think the source is not just asymmetric but bounded information – info are always bounded. Every single or combined participants do all decisions under bounded information. The traditional perfect market surely does not mean a market with no bounded information anywhere. Moreover, don’t forget another important factor of incentive problem that is the conflicting objectives. If we can create a limited situation in which all the individuals have the exactly same objective, the incentive problem will not bother us even we have asymmetric information. And this conflicting objectives certainly exist in any perfect market that you can imagine.)

Kim, et al.(2006) 1970〜2005 in 41 academic magazine over 500 citationスクリーンショット 2017-07-23 22.10.54

契約理論が経済学に与えた影響:
1)あらゆる社会制度におけるincentiveの分析や限定された情報がもたらす問題の再認識
2)second bestの考え方の浸透 ←問題の根源であるasy info&incomp conを解決できない+様々なシステムのTC&agency cost&仕組みを考え、最低費用で最高効率のincentive設計
3)managementの諸問題の研究とbusiness schoolへの影響:(Porter 1980)が経営戦略の分野に産業組織論やゲーム理論の考え方を導入して新しい競争戦略論を確立/その後契約理論は,組織,企業金融,人事,会計,marketingなどの多くのmanagement機能の研究で,agency関係の枠組みで行われ
4)ゲーム理論の「中間建築物」としての役割: (神取(1994)「ゲーム理論がもたらした経済学の変貌」: 1.配分の効率性からmechanismの効率性へ; 2.自由放任主義の限界; 3.誘因(incentive)制御問題の論理構造)

 

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2017/08/01 update:

「合同理论」有哪些实际应用?

国家和国家的有限承诺出尔反尔问题,设计renegociation-proof合约,看看Macro Battaglini。

企业给雇员设计长期合约来达到最优路径努力,Ilya Segal & Alexandro Pavan。

A theory of prostitution L Edlund, E Korn – Journal of political Economy, 2002

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