Paper #1647
- Título:
- Monotone contracts
- Autores:
- Daniel Bird y Alexander Frug
- Fecha:
- Abril 2019
- Resumen:
- 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 e ect 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.
- Palabras clave:
- Dynamic contracting, stochastic opportunities.
- Códigos JEL:
- D86
- Área de investigación:
- Microeconomía
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