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Home | Events Archive | Mock job market seminar
Seminar

mock job market seminar


  • Location
    Online
  • Date and time

    November 12, 2020
    12:00 - 13:00

if you want to join this seminar please send an email to: ae-secr@ese.eur.nl

Title: Financing Breakthroughs under Failure Risk

In a dynamic principal-agent model, the principal, financing the project, cannot observe project failure and the agent, developing the project, can hide or fake failure. Punishments for completion delays, excessive rewards for success, and occasional rewards for failure provide incentives for truthful disclosure of failure. The optimal contract does not always incentivize disclosure of failure and consists of distinct financing stages whereby financing becomes more performance sensitive over time. Rewards for success decrease during a given financing stage but increase once a new financing stage begins. Dynamic monitoring substitutes for rewards for failure and punishments for delays in incentive provision.