Nizar Touzi (CMAP, Ecole Polytechnqiue) Is there a Golden Parachute in Sannikov's principal-agent problem?
Abstract:
This paper provides a complete review of the continuous--time optimal contracting problem introduced by Sannikov (2008) in the extended context allowing for possible different discount factors of both parties. The agent's problem is to seek for optimal effort, given the compensation scheme proposed by the principal over a random horizon. Then, given the optimal agent's response, the principal determines the best compensation scheme in terms of running payment, retirement, and lump--sum Read more [...]
