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Consistency between principal and agent with differing time horizons: Computing incentives under risk

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  • Schosser, Josef

Abstract

In a parsimonious model, we analyze how to obtain consistent incentives when both principal and agent are risk-averse and when a setting prevails in which the agent may have a shorter time horizon than the principal. Intertemporal dependencies in risky cash flows are taken into account.

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  • Schosser, Josef, 2019. "Consistency between principal and agent with differing time horizons: Computing incentives under risk," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1113-1123.
    • Handle: RePEc:eee:ejores:v:277:y:2019:i:3:p:1113-1123
    DOI: 10.1016/j.ejor.2019.03.044
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    More about this item

    Keywords

    Decision analysis; Investment decision; Intertemporal dependencies; Performance measure; Relative benefit cost allocation;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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