Título: Successive Incentives
Ponente: Juan D. Moreno-Ternero (Universidad Pablo Olavide)
Fecha y hora: 26/09/2024, 12:00
Inscripción online (cierre 30 minutos antes del inicio): https://forms.gle/yadtibaswNRiAx3s6
Lugar: Sala de Seminarios (UMH Campus de Elche, Edificio Torretamarit) y online
Organizador: Joaquín Sánchez Soriano
Abstract:
We study the design of optimal incentives in sequential processes. To do so, we consider a basic and fundamental model in which an agent initiates a value-creating sequential process through costly investment with random success. If unsuccessful, the process stops. If successful, a new agent thereafter faces a similar investment decision, and so forth. For any outcome of the process, the total value is distributed among the agents using a reward rule. Reward rules thus induce a game among the agents. By design, the reward rule may lead to an asymmetric game, yet we are able to show equilibrium existence with optimal symmetric equilibria. We characterize optimal reward rules that yield the highest possible welfare created by the process, and the highest possible expected payoff for the initiator of the process. Our findings show that simple reward rules invoking short-run incentives are sufficient to meet long-run objectives.
This talk is based on joint works with
- Jens Gudmundsson, Jens Leth Hougaard and Lars Peter Österdal