ERN: Information Asymmetry Models (Topic)最新文献

{"title":"Dynamic Moral Hazard with Adverse Selection - A Pontryagin Approach","authors":"Feng Tian, Feifan Zhang, Peng Sun, Izak Duenyas","doi":"10.2139/ssrn.3924935","DOIUrl":"https://doi.org/10.2139/ssrn.3924935","url":null,"abstract":"We study the optimal incentive scheme for a long-term project with both moral hazard and adverse selection. The moral hazard issue is due to the fact that the agent's effort, which increases the arrival rate of a Poisson process, is not observable by the principal. In addition, the agent's effort cost, which needs to be reimbursed by the principal, is also the agent's private information. This gives rise to the adverse selection problem. The principal needs to design the optimal menu of contracts, each of which is chosen by the agent with a specific effort cost. We fully characterize the optimal menu in the case of two types of agents. Specifically, the agent with a lower cost is offered a probation contract, which confirms the agent's type if there is an arrival during a probation period; the agent with the higher cost is offered a sign-on-bonus contract with an immediate direct initial payment. We then explore the more general case with continuous types of agents. In particular, we provide an easy-to-compute upper bound on the principal's utility. The upper bound computation also yields a feasible menu of probation and sign-on-bonus contracts, and the corresponding lower bound it generates. We further provide a condition which can be used to verify whether the upper and lower bounds coincide, implying the optimality of our feasible menu of contracts. Numerical studies confirm that the verification condition almost always holds for commonly used probability distributions of the effort cost.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"94 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128659539","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Incentives for Contract Designers","authors":"A. Rodivilov","doi":"10.2139/ssrn.3917993","DOIUrl":"https://doi.org/10.2139/ssrn.3917993","url":null,"abstract":"This paper examines the optimal provision of incentives for contract designers. A principal hires an agent to draft a contract that is incomplete because the ex-ante specified design might not be appropriate ex-post. The degree of contract incompleteness is endogenously determined by the effort exerted by the agent, who can manipulate the principal's beliefs because his effort may not be observable (moral hazard), and he might be better informed at the outset (adverse selection). We characterize the optimal incentive scheme for the agent and discuss implications for the degree of buyer-seller contract incompleteness and the optimal prices. Without adverse selection, the principal-seller contract is more incomplete and is coupled with a smaller price in a better environment. If the adverse selection problem is severe enough, the principal-seller contract is less incomplete and is coupled with a higher price in a better environment.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130345195","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Imperfect Competition in Markets with Selection","authors":"Markus Parlasca","doi":"10.2139/ssrn.3892731","DOIUrl":"https://doi.org/10.2139/ssrn.3892731","url":null,"abstract":"This paper proposes a spatial model of imperfect competition in markets with selection to investigate whether imperfect competition exacerbates or offsets inefficiencies caused by selection. We find that no degree of imperfect competition achieves the first-best efficient allocation. This holds in markets with adverse selection and even in markets with advantageous selection, where perfect competition results in inefficient overprovision. Overprovision induced by advantageous selection and underprovision caused by market power do not cancel out perfectly. Instead, they co-exist for different consumers. The exact allocation depends on whether firms use uniform prices or price discriminate. However, we show that the efficient allocation can be reached through a combination of a corrective tax and tough competition policy. Overall, our results caution against viewing imperfect competition as a solution to the inefficiencies introduced by selection.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"102 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122519156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Adverse Selection in Capital Markets with Heterogeneous Risk Preferences and Beliefs","authors":"Thomas J. Rivera","doi":"10.2139/ssrn.3857114","DOIUrl":"https://doi.org/10.2139/ssrn.3857114","url":null,"abstract":"We study the ability of a manager, who seeks outside financing for a new project, to disclose private information about the project's risk. We assume the manager and the outside investor that offers the best financing terms may have heterogeneous and privately known risk preferences (equivalently beliefs regarding the risk return relationship). In this case, all costly signaling possibilities break down and no information can be credibly disclosed regarding the project's risk, no matter how precise. This general result does not rely on participation constraints nor budget balance concerns meaning no amount of outside taxes or subsidies can resolve it. Further, we show that full disclosure of private information is impossible even if risk preferences are public information. In contrast, when the manager and outside investor have homogeneous risk preferences (equivalently beliefs), then full disclosure of risk is achievable, highlighting important robustness concerns in contracting problems that assume homogeneous agents.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122574504","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Unintended Cost of Data Breach Notification Laws: Evidence from Managerial Bad News Hoarding","authors":"Ivan Obaydin, Limin Xu, R. Zurbruegg","doi":"10.2139/ssrn.3926962","DOIUrl":"https://doi.org/10.2139/ssrn.3926962","url":null,"abstract":"We investigate how a consumer protection law can exacerbate firms’ agency issues. Our analysis focuses on the staggered adoption of state-level data breach notification laws that require firms to disclose data breaches. We find that the enactment of these laws leads to a rise in stock price crash risk by incentivizing managers to stockpile negative financial news. The cross-sectional analysis also reveals that the impact is stronger where managers have either a greater incentive or ability to hoard information. Our results highlight that an improved operational disclosure regime can have unintended capital market consequences.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130932274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Role of Information Asymmetries in Firms' Voluntary Decertification from Private Standards","authors":"Ivan Montiel, Remy Balarezo, Elena Vidal, Petra Christmann","doi":"10.2139/ssrn.3778239","DOIUrl":"https://doi.org/10.2139/ssrn.3778239","url":null,"abstract":"Firms pursue third-party certification to private standards to reduce firm-level information asymmetries of certain unobservable characteristics and thus obtain legitimacy. However, when the private standard’s legitimacy dilutes, those same firms have reasons to abandon certifications voluntarily – i.e., decertify. Yet our inductive decertification study reveals a more complex set of dynamics beyond legitimacy dilution, which also facilitates decertification behavior. We identify certification-level information asymmetries associated with the ambiguity of the certification per-se that allows firms to act opportunistically and decertify silently. Finally, our findings also unveil that even in the absence of certification-level information asymmetries between the firm and certain stakeholders, firms are oftentimes granted certification waivers, which create an easier path towards decertification.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116977534","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Breaking through the Gender Digital Divide: Technology, Social Norms, and the WomenConnect Challenge","authors":"Revi Sterling, Lauren Grubbs, Thomas M. Koutsky","doi":"10.2139/ssrn.3749643","DOIUrl":"https://doi.org/10.2139/ssrn.3749643","url":null,"abstract":"In 2018, we introduced the TPRC community to USAID’s WomenConnect Challenge, a project designed to identify effective solutions to the gender digital divide in developing countries. Now, in 2020, the original set of WomenConnect projects we introduced have completed and yielded a range of effective practices to bridge the gender divide – as well as new challenges not foreseen in project development. While some positive traction has been made in closing the gender gap, internet access remains out of range for over two billion women, and some studies show that the gender gap is increasing. Given the trend of international development sectors to embrace digital development strategies, this gap is now all the more critical to close. We have known for decades that women are the key to sustainable health, education, and livelihoods in their communities; now we are inadvertently making it more difficult for women to access the very information they need for development by going digital. \u0000 \u0000We are not going to turn back the wave of digital development – there are too many promises afforded by the potential scale and reach, and too much momentum from industry and donor communities. What we can do as technologists and policymakers is spark new interest in an old topic – the gender digital divide – by recommending approaches that are far more effective than typical digital literacy courses and trainings that offer little impact and provide even smaller returns on investment. If women lack the confidence to even interact with technology; if they live under restrictive social norms that prohibit technology use, and if there are no tangible socioeconomic benefits from internet access, then this gap will never close. \u0000 \u0000The WomenConnect Challenge is the largest U.S. government research project dedicated to identifying, funding, and scaling solutions to the gender digital divide. Phase 1 was grounded in participatory action research and focused on creating compelling cases for women’s technology ownership and use. Pilot projects reflected local contexts and demonstrate a set of effective practices that would be more efficient and effective in addressing this critical gender gap. While these case studies have informed additional multimillion-dollar commitments from the U.S. Government and private sector, they are starting points for re-engaging with a divide that must be closed in order for digital development writ large to be effective, while advancing policy discussions and changes that can institutionalize solutions that work.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116171633","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Auctioning Annuities","authors":"Gaurab Aryal, Eduardo Fajnzylber, M. Gabrielli, M. Willington","doi":"10.2139/ssrn.3801287","DOIUrl":"https://doi.org/10.2139/ssrn.3801287","url":null,"abstract":"We use data on annuities to study and evaluate an imperfectly competitive market where firms have private information about their (annuitization) costs. Our data is from Chile, where the market is structured as first-price-auction-followed-by-bargaining, and where each retiree chooses a firm and an annuity contract to maximize her expected present discounted utility. We find that retirees with low savings have the highest information processing cost, and they also care about firms' risk-ratings the most. Furthermore, while almost 50% of retirees reveal that they do not value leaving bequests, the rest have heterogeneous preference for bequest that, on average, increases with their savings. On the supply side, we find that firms' annuitization costs vary across retirees, and the average costs increase with retirees' savings. If these costs were commonly known then the pensions would increase for everyone, but the increment would be substantial only for the high savers. Likewise, if we simplify the current pricing mechanism by implementing English auctions and \"shutting down\" the risk-ratings, then the pensions would increase, but again, mostly for the high savers.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126549213","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"When to Ask for An Update: Timing in Strategic Communication","authors":"Ying Chen, Atara Oliver","doi":"10.2139/ssrn.3731130","DOIUrl":"https://doi.org/10.2139/ssrn.3731130","url":null,"abstract":"A principal (receiver) considers whether to accept a project whose total value depends on two aspects. In each period, an agent (sender) privately learns the value of one aspect with positive probability. We compare two common reporting protocols: frequent updating, which requires the sender to report in each period, and infrequent updating, which requires him to report only at the end of the learning process. The sender is biased towards acceptance; he may conceal his signal, but cannot otherwise misrepresent.<br><br>If the receiver would reject the project under the prior, then the equilibrium outcome is the same regardless of the updating frequency under certain regularity conditions. In contrast, if the project’s prior expected value is sufficiently high, then updating frequency matters. Specifically, if it is sufficiently unlikely for the sender to be informed in a later period and the players’ interests are sufficiently aligned, then frequent updating is better for the receiver since it encourages the sender to reveal provisionally unfavorable information early on. When it is sufficiently likely for the sender to be informed in a later period, however, infrequent updating is better for the receiver. Conditional delegation captures the benefits of both frequent and infrequent updating.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131417092","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Liquidity Commonality and its Pricing: Evidence from Firms in Supply Chain Networks","authors":"B. Hong","doi":"10.2139/ssrn.3709422","DOIUrl":"https://doi.org/10.2139/ssrn.3709422","url":null,"abstract":"This paper investigates how economic links from customer-supplier relationships affect liquidity commonality and its pricing. I show that a stock's liquidity co-moves with liquidity of its economically linked stocks and this liquidity commonality decreases with the level of information asymmetry on the stock. A long-short portfolio from the high-minus-low liquidity commonality with economically linked firms yields economically and statistically significant average returns, and these returns cannot be explained by majorly known systematic risk factors. The results imply that supply-chain networks are another important channel for liquidity risk.","PeriodicalId":411364,"journal":{"name":"ERN: Information Asymmetry Models (Topic)","volume":"69 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132210179","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}