Team Production, Sequential Investments, and Stochastic Payoffs

This paper investigates a team production problem where two parties invest sequentially to generate a joint surplus. We find that the first best can be implemented even if the investment return is highly uncertain. The optimal contract entails a basic dichotomy: it is a simple option contract if inv...

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Veröffentlicht in:	Journal of institutional and theoretical economics 2001-09, Vol.157 (3), p.430-442
1. Verfasser:	Lülfesmann, Christoph
Format:	Artikel
Sprache:	eng
Schlagworte:	Assets Contract incentives Contracts Financial investments Incentive pay Investment Investment risk Investment value Options contracts Ownership Production Production efficiency Return on investment Strike prices
Online-Zugang:	Volltext
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