Incentives under collusion in a two-agent hidden-action model of a financial enterprize

This study analyzes collusion in an enterprize in which concerns about hedging cannot be ignored. In our two-agent single-task hidden-action model, where all the parties involved have exponential utility functions and the principal owning normally distributed observable and verifiable returns is restricted to o®er linear contracts, agents may exploit all feasible collusion opportunities via enforceable side contracts. Hence in general, an optimal incentive compatible and individually rational contract is not necessarily immune to collusion. We demonstrate that collusion may be ignored when making the agents work with the highest effort profile is profitable for the principal and either of the following holds: (1) mean of the return is only a®ected by the first agent's effort level, whereas variance of that is only affected by the second agent's, (2) mean is increasing and variance is decreasing separately in effort levels of both of them. On the other hand, for situations in which any of these assumptions are violated, numerical examples, showing that collusion may make the principal strictly worse off, are provided. For the justification of linear contracts as was done in the model of Holmstrom and Milgrom (1987) we consider a variant of its generalization given by Sung (1995), into which collusion possibilities are incorporated. In that continuous-time repeated agency problem including collusion, we prove the optimality of linear contracts

Optimality of linearity with collusion and renegotiation

This study analyzes a continuous-time N-agent Brownian hidden-action model with exponential utilities, in which agents' actions jointly determine the mean and the variance of the outcome process. In order to give a theoretical justification for the use of linear contracts, as in Holmstrom and Milgrom (1987), we consider a variant of its generalization given by Sung (1995), into which collusion and renegotiation possibilities among agents are incorporated. In this model, we prove that there exists a linear and stationary optimal compensation scheme which is also immune to collusion and renegotiation

Inducing good behavior via reputation

This paper asks whether or not it is possible to induce agents to good behavior permanently via regulators' reputations and attain perpetual social efficiency. We propose and analyze a repeated incomplete information game with a specific payoff and monitoring structure between a regulator possessing a behavioral type and an agent. We provide an affirmative answer when a patient regulator faces myopic agents: Reputation empowers the regulator to prevent agents' bad behavior in the long-run with no cost and hence to attain the social optimum in any Nash equilibrium. However, with long-lived and patient players, reputation cannot induce permanent good behavior in equilibrium involving sporadic experimentation with bad behavior. The stark contrast between these cases portrays the significance of the longevity of the interaction and provides a novel application of the theory of learning and experimentation in repeated games

A genomic snapshot of demographic and cultural dynamism in Upper Mesopotamia during the Neolithic Transition

Upper Mesopotamia played a key role in the Neolithic Transition in Southwest Asia through marked innovations in symbolism, technology, and foodways. We present thirteen ancient genomes (c.8500-7500 calBCE) from Pre-Pottery Neolithic Çayönü in the Tigris basin together with bioarchaeological and material culture data. Our findings reveal that Çayönü was a genetically diverse population, carrying a mixed ancestry from western and eastern Fertile Crescent, and that the community received immigrants. Our results further suggest that the community was organised along biological family lines. We document bodily interventions such as head-shaping and cauterization among the individuals examined, reflecting Çayönü's cultural ingenuity. Finally, we identify Upper Mesopotamia as the likely source of eastern gene flow into Neolithic Anatolia, in line with material culture evidence. We hypothesise that Upper Mesopotamia's cultural dynamism during the Neolithic Transition was the product not only of its fertile lands but also of its interregional demographic connections

Occurrence of deception under the oversight of a regulator having reputation concerns

This paper studies deceptions conducted by agents in the presence of a regulator. The regulator is supposed to detect deviations from the “rightful” behavior through costly monitoring; thus she may not choose to be diligent in her job because of the associated costs. The goal is to understand the occurrence of deceptions when the interaction of the parties is not contractible, their behavior is not observable and the regulator has reputation concern for being perceived as diligent in a repeated incomplete-information setting. It is found that when the regulator faces a sequence of myopic agents, her payoff at any Nash equilibrium converges to the maximum payoff as the discount factor approaches to one for any prior belief on the regulator’s type. This suggests that, contrary to the well-known disappearance of reputation results in the literature, the reputation of the regulator for being diligent persists in the long-run in any equilibrium. These findings imply that socially undesirable behavior of the agents could be prevented through reputation concerns in this repeated setting

Stratejik İletişim ve İkna Üzerine Bir İnceleme

This survey paper presents an extended literature review of strategic communication and persuasion. The goal is to provide a systematic categorization of the different approaches in the literature, accompanied with the discussions of the pioneer and leading papers as well as the frontier research in each of the categories.Bu inceleme çalışması, stratejik iletişim ve ikna etme üzerine detaylı bir literatür taraması sunmaktadır. Araştırmanın amacı literatürdeki farklı yaklaşımların sistematik bir sınıflandırmasını yaparken, her bir kategoride öne çıkan çalışmaları, belirleyici ve öncü makaleleri tartışmaları ile ortaya koymaktır

Disappearance of reputations in two-sided incomplete-information games

This paper examines the sustainability of reputations in a class of games with imperfect public monitoring and two long-lived players, both of whom have private information about their own type and uncertainty over the types of the other player. This class, namely reputation games with one-sided moral hazard, can capture economic interactions that may involve hidden-information or hidden-action. Extending the techniques of Cripps et al. (2004), it is found that neither player can sustain a reputation permanently for playing a noncredible behavior in these games; and, the reputations disappear uniformly across all Nash equilibria. (C) 2014 Elsevier Inc. All rights reserved

Inducing good behavior via reputation

This paper asks whether or not it is possible to induce agents to good behavior permanently via regulators' reputations and attain perpetual social efficiency. We propose and analyze a repeated incomplete information game with a suitable payoff and monitoring structure between a regulator possessing a behavioral type and an agent. We provide an affirmative answer when a patient regulator faces myopic agents: Reputation empowers the regulator to prevent agents' bad behavior in the long-run with no cost and, hence, attain the social optimum in any Nash equilibrium. These findings are robust to requiring short-lived agents to choose any one of their actions with an arbitrarily small but positive probability. On the other hand, we show that when both parties are long-lived and sufficiently patient, the limiting robust equilibrium cannot be close to perpetual good behavior. The contrast we attain demonstrates the significance of the interaction's longevity and exhibits a novel application of the theory of learning and experimentation in repeated games