Principal-agent contracts in continuous time asymmetric information models: the importance of large continuing information flows

Article Abstract:

The large information flows between principals and agents in particular contexts are described by continuous time models usually structured as Brownian motion. Principal-agent contracts in these models should acknowledge that the variance of a Brownian motion process can be computed by the principal from any time span of data regardless of its length. The variance is therefore public information. The principal has greater control over the agent than previously recognized if the variance is open to choice.

Information management, Brownian motion

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Information contagion and the economics of pollution

Article Abstract:

A study was conducted to examine the conditions under which economic agents would consent to shouldering the additional cost of devices for preventing environmental pollution. Simulations were performed to determine the maximum price that the agents agree to pay for non-polluting instruments as a function of pollution, generation of information and memory features of the agents. The spatio-temporal dynamics of choices, market shares and pollution were also investigated.

Economic aspects, Pollution, Pollution control equipment

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Information and the control of agents

Article Abstract:

Accuracy of information and timely monitoring, even at zero cost, do not completely inure a firm from moral hazards such as theft. Other principal-agent models of controlling moral hazards must be considered such as the size of the potential gains and losses associated with malfeasance and the ability to reacquire ill-gotten wealth and impose sanctions. Thus, agency problems can considerably impact on the organizational structures and technologies within the firm.

Analysis, Ethical aspects, Employee crimes, Danger (Law), Agency (Law)

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