Paper #1647

Títol:

Monotone contracts

Autors:

Daniel Bird i Alexander Frug

Data:

Abril 2019

Resum:

A common feature of dynamic interactions is that the environment in which they occur typically changes, perhaps stochastically, over time. We consider a general uctuating contracting environment with symmetric information, and identify a systematic eect of the uctuations in the environment on optimal contracts. We develop a notion of a separable activity that corresponds to a large class of contractual components, and provide a tight condition under which these components manifest a form of seniority: any change that occurs in these components over time, under an optimal contract, favors the agent. We illustrate how our results can be applied in various economic settings.

Paraules clau:

Dynamic contracting, stochastic opportunities.

Codis JEL:

D86

Àrea de Recerca:

Microeconomia

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