Unobservable Persistant Productivity and Long Term Contracts

We study the problem of a firm that faces asymmetric information about the productivity of its potential workers. In our framework, a worker’s productivity is either assigned by nature at birth, or determined by an unobservable initial action of the worker that has persistent effects over time. We provide a characterization of the optimal dynamic compensation scheme that attracts only high productivity workers: consumption –regardless of time period– is ranked according to likelihood ratios of output histories, and the inverse of the marginal utility of consumption satisfies the martingale property derived in Rogerson (1985). However, in the case of i.i.d. output and square root utility we show that, contrary to the features of the optimal contract for a repeated moral hazard problem, the level and the variance of consumption are negatively correlated, due to the influence of early luck into future compensation. Moreover, in this example long-term inequality is lower under persistent private informationMechanism design, Moral hazard, Persistence

Review of perspectives applied in the assessment of organic food networks

Value is a key concept for understanding how organic food networks function because values are the foundation of the organic production practice, thus value must be given a significant role in assessing and balancing the effects of organic food networks. At the same time value is a loose concept, widely used and with various meanings in different scientific perspectives, in which ontological difference produces different perceptions of what values are. Assessing organic food networks is thus a complicated process, since the perspective which is chosen has important implications for the analysis and for the outcome of the assessment. This paper reviews five perspectives which predominate in the assessment of food networks, 1) Food Science, 2) Discourse Analysis, 3) Phenomenology, 4) Neoclassical Welfare Economics and 5) ANT. The perspectives are compared with regards to how the food network is assessed, how value is measured and how organic is understood. It is concluded that the perspectives focus analytically on different aspects of the same phenomena and differ in terms of where value is found, but also in the degree of reductionism applied, which factors are included in the analysis and whether or not the analysis focuses on the individual actors or the network as a whole