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First-order Approach
In microeconomics and contract theory, the first-order approach is a simplifying assumption used to solve models with a principal-agent problem. It suggests that, instead of following the usual assumption that the agent will take an action that is utility-maximizing, the modeller use a weaker constraint, and looks only for actions which satisfy the first-order conditions of the agent's problem. This makes the model mathematically more tractable (usually resulting in closed-form solutions), but it may not always give a valid solution to the agent's problem. History Historically, the first-order approach was the main tool used to solve the first formal moral hazard models, such as those of Richard Zeckhauser, Michael Spence, and Joseph Stiglitz. Not long after these models were published, James Mirrlees was the first to point out that the approach was not generally valid, and sometimes imposed even stronger necessary conditions than those of the original problem. Following th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Microeconomics
Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the national economy as whole, which is studied in macroeconomics. One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses. Microeconomics shows conditions under which free markets lead to desirable allocations. It also analyzes market failure, where markets fail to produce efficient results. While microeconomics focuses on firms and individuals, macroeconomics focuses on the sum total of economic activity, dealing with the issues of growth, inflation, and unemployment and with national policies relating to these issues. Microeconomics also d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Joseph Stiglitz
Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank. He is also a former member and chairman of the (US president's) Council of Economic Advisers. He is known for his support of Georgist public finance theory and for his critical view of the management of globalization, of '' laissez-faire'' economists (whom he calls " free-market fundamentalists"), and of international institutions such as the International Monetary Fund and the World Bank. In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. He has been a member of the Columbia faculty since 2001, and received the university's highest acade ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Participation Constraint
In game theory, and particularly mechanism design, participation constraints or individual rationality constraints are said to be satisfied if a mechanism leaves all participants at least as well-off as they would have been if they hadn't participated. Unfortunately, it can frequently be shown that participation constraints are incompatible with other desirable properties of mechanisms for many purposes. One kind of participation constraint is the participation criterion for voting systems. It requires that by voting, a voter should not decrease the odds of their preferred candidates winning. See also * Individual rationality * Compensating variation In economics, compensating variation (CV) is a measure of utility change introduced by John Hicks (1939). 'Compensating variation' refers to the amount of additional money an agent would need to reach their initial utility after a change in prices, ... Mechanism design Electoral system criteria {{gametheory-stub ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Incentive Compatibility
A mechanism is called incentive-compatible (IC) if every participant can achieve the best outcome to themselves just by acting according to their true preferences. There are several different degrees of incentive-compatibility: * The stronger degree is dominant-strategy incentive-compatibility (DSIC). It means that truth-telling is a weakly-dominant strategy, i.e. you fare best or at least not worse by being truthful, regardless of what the others do. In a DSIC mechanism, strategic considerations cannot help any agent achieve better outcomes than the truth; hence, such mechanisms are also called strategyproof or truthful. (See Strategyproofness) * A weaker degree is Bayesian-Nash incentive-compatibility (BNIC). It means that there is a Bayesian Nash equilibrium in which all participants reveal their true preferences. I.e, ''if'' all the others act truthfully, ''then'' it is also best or at least not worse for you to be truthful. Every DSIC mechanism is also BNIC, but a BNIC mech ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Ian Jewitt
Ian or Iain is a name of Scottish Gaelic origin, derived from the Hebrew given name (Yohanan, ') and corresponding to the English name John. The spelling Ian is an Anglicization of the Scottish Gaelic forename ''Iain''. It is a popular name in Scotland, where it originated, as well as other English-speaking countries. The name has fallen out of the top 100 male baby names in the United Kingdom, having peaked in popularity as one of the top 10 names throughout the 1960s. In 1900, Ian was the 180th most popular male baby name in England and Wales. , the name has been in the top 100 in the United States every year since 1982, peaking at 65 in 2003. Other Gaelic forms of "John" include "Seonaidh" ("Johnny" from Lowland Scots), "Seon" (from English), "Seathan", and "Seán" and "Eoin" (from Irish). Its Welsh counterpart is Ioan, its Cornish equivalent is Yowan and Breton equivalent is Yann. Notable people named Ian As a first name (alphabetical by family name) *Ian Agol (born 19 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
William P
William is a masculine given name of Norman French origin.Hanks, Hardcastle and Hodges, ''Oxford Dictionary of First Names'', Oxford University Press, 2nd edition, , p. 276. It became very popular in the English language after the Norman conquest of England in 1066,All Things William"Meaning & Origin of the Name"/ref> and remained so throughout the Middle Ages and into the modern era. It is sometimes abbreviated "Wm." Shortened familiar versions in English include Will, Wills, Willy, Willie, Liam, Bill, and Billy. A common Irish form is Liam. Scottish diminutives include Wull, Willie or Wullie (as in Oor Wullie or the play ''Douglas''). Female forms are Willa, Willemina, Wilma and Wilhelmina. Etymology William is related to the German given name ''Wilhelm''. Both ultimately descend from Proto-Germanic ''*Wiljahelmaz'', with a direct cognate also in the Old Norse name ''Vilhjalmr'' and a West Germanic borrowing into Medieval Latin ''Willelmus''. The Proto-Germa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bengt Holmström
Bengt Robert Holmström (born 18 April 1949) is a Finnish economist who is currently Paul A. Samuelson Professor of Economics (Emeritus) at the Massachusetts Institute of Technology. Together with Oliver Hart, he received the Central Bank of Sweden Nobel Memorial Prize in Economic Sciences in 2016. Early life and education Holmström was born in Helsinki, Finland on 18 April 1949, and belongs to the Swedish speaking minority of Finland. He received his B.S. in mathematics and science from the University of Helsinki in 1972. He also received a Master of Science degree in Operations Research from Stanford University in 1975. He received his Ph.D. from the Graduate School of Business at Stanford in 1978. He moved to the United States in 1976. Career He worked as a corporate planner from 1972 until 1974, then was an assistant professor at the Swedish School of Economics and Business Administration from 1978 until 1979. He served as an associate professor at the Kellogg G ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
James Mirrlees
Sir James Alexander Mirrlees (5 July 1936 – 29 August 2018) was a British economist and winner of the 1996 Nobel Memorial Prize in Economic Sciences. He was knighted in the 1997 Birthday Honours. Early life and education Born in Minnigaff, Kirkcudbrightshire, Mirrlees was educated at Douglas Ewart High School, then at the University of Edinburgh ( MA in Mathematics and Natural Philosophy in 1957) and Trinity College, Cambridge (Mathematical Tripos and PhD in 1963 with thesis title ''Optimum Planning for a Dynamic Economy'', supervised by Richard Stone). He was a very active student debater. A contemporary, Quentin Skinner, has suggested that Mirrlees was a member of the Cambridge Apostles along with fellow Nobel Laureate Amartya Sen during the period. Economics Between 1968 and 1976, Mirrlees was a visiting professor at the Massachusetts Institute of Technology three times. He was also a visiting professor at the University of California, Berkeley (1986) and Yale Unive ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Michael Spence
Andrew Michael Spence (born November 7, 1943) is a Canadian-American economist and Nobel laureate. Spence is the William R. Berkley Professor in Economics and Business at the Stern School of Business at New York University, and the Philip H. Knight Professor of Management, Emeritus, and Dean, Emeritus, at the Stanford Graduate School of Business. Together with George A. Akerlof and Joseph E. Stiglitz, Spence is a co-recipient of the 2001 Nobel Memorial Prize in Economic Sciences, "for their analyses of markets with asymmetric information." Career Spence is noted for his job-market signaling model, which inspired research into this branch of contract theory. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less cos ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Contract Theory
From a legal point of view, a contract is an institutional arrangement for the way in which resources flow, which defines the various relationships between the parties to a transaction or limits the rights and obligations of the parties. From an economic perspective, contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of information asymmetry. Because of its connections with both agency and incentives, contract theory is often categorized within a field known as law and economics. One prominent application of it is the design of optimal schemes of managerial compensation. In the field of economics, the first formal treatment of this topic was given by Kenneth Arrow in the 1960s. In 2016, Oliver Hart and Bengt R. Holmström both received the Nobel Memorial Prize in Economic Sciences for their work on contract theory, covering many topics from CEO pay to privatizations. Holmström ( MIT) focused more on the connect ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Richard Zeckhauser
Richard Jay Zeckhauser (born 1940) is an American economist and the Frank P. Ramsey Professor of Political Economy at the Kennedy School of Government at Harvard University. He holds a BA (''summa cum laude'') and a PhD in economics from Harvard University. Early in his career, he was one of the " whiz kids" assembled by Defense Secretary Robert S. McNamara to apply cutting-edge analysis to Cold War military strategy. He is married to Sally H. Zeckhauser. He is the author or co-author of many books and over 300 peer-reviewed articles. His most significant works focus on risk management, decision sciences, investment, and policy-making under uncertainty. Zeckhauser introduced the term "ignorance" into decision-making under uncertainty, as in: there's "risk", "uncertainty", and outright "ignorance". His most recent book, with Peter Schuck, is ''Targeting in Social Programs.'' The book examines how and why to deploy scarce public resources to solve public problems. While he hold ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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