Economics Seminar Series: Lucas Maestri, Toulouse School of Economics

Title: The Ratchet-Effect Implies no Learning: Dynamic Contracting without Commitment

Info about event

Time

Tuesday 3 September 2013,  at 14:15 - 15:30

Location

Fuglesangs Allé 4, 8210 Aarhus V, building 2632(L), room 242

Organizer

Alexander Koch

Speaker: Lucas Maestri, Toulouse School of Economics

Title: The Ratchet-Effect Implies no Learning: Dynamic Contracting without Commitment

Abstract: We study an infinitely repeated principal-agent model under adverse-selection and short-term contracts. Due to her lack of commitment, the principal changes the terms of trade when she learns that the agent has a high productivity. As a result, little information is revealed in the relationship. The ratchet effect implies that the allocation converges to a pooling one as the parties become more patient.

Organizer: Alexander Koch