Speaker: 魏冬 (Dong Wei)

Title: Turning the Ratchet: Dynamic Screening with Multiple Agents

Schedule: June 6, Tu 1:30-3:30 PM

Location: 诚明楼 (Chengming Hall）RM 315

 

Introduction: Dong Wei is an Assistant Professor of Economics at the University of California, Santa Cruz. He holds a Ph.D. in Economics from UC Berkeley. His current research focuses on information transmission and disclosure in dynamic settings. His research has been published in several peer-reviewed journals, including American Economic Review, AER: Insights, and Games and Economic Behavior.

 

Abstract: We study a dynamic contracting problem with multiple agents and a lack of commitment. A principal who can only commit to one-period contracts would like to screen efficient (i.e., low-cost) workers over time and assign harder tasks to them. After efficiency is revealed, the principal becomes tempted to change the terms of trade. Breaches in contracts are observable and, hence, whenever past promises are not honored future information revelation stops. We provide necessary and sufficient conditions under which the principal is able to foster information revelation. Optimal contracts entail high-powered incentives after information is initially revealed, and rewards for information revelation disappear in the long run. Information revelation becomes easier when workers are stochastically replaced by new ones.