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Marina Halac, Navin Kartik, Qingmin Liu, Optimal Contracts for Experimentation, The Review of Economic Studies, Volume 83, Issue 3, July 2016, Pages 1040–1091, https://doi.org/10.1093/restud/rdw013
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Abstract
This paper studies a model of long-term contracting for experimentation. We consider a principal–agent relationship with adverse selection on the agent’s ability, dynamic moral hazard, and private learning about project quality. We find that each of these elements plays an essential role in structuring dynamic incentives, and it is only their interaction that generally precludes efficiency. Our model permits an explicit characterization of optimal contracts.
© The Author 2016. Published by Oxford University Press on behalf of The
Review of Economic Studies Limited.
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