Published papers

© 2018 Wiley Periodicals, Inc. We analyze the delegation policy when the principal has reputational concerns. Both the principal and the agent can be either good or biased; the good players prefer the correct decision, while the biased ones prefer a high action even though it may be wrong. An evaluator who forms the principal's reputation may or may not be able to observe who makes the decision. When the evaluator cannot observe the allocation of authority, the principal shares the credit and blame with the agent. Although delegation can improve the quality of decision making because the agent has better information, it may also hurt the good principal's reputation because the high action may be taken by the biased agent while the blame will be shared when it is wrong. Thus, the good principal has a tendency to keep too much authority to maintain her reputation. By contrast, when the evaluator can observe the allocation of authority, delegation becomes a signaling device for the good type of principal to differentiate herself from the biased one. This results in an excessive allocation of authority toward the agent.

© 2020, Economics Bulletin. In this study, we analyze a simple moral hazard model in which a risk-neutral agent has career concerns and is protected by limited liability. The agent cares about both career concerns and explicit incentives given by the principal. We consider the following two cases: (i) when the explicit contract is unobservable for the labor market, and (ii) when the principal discloses contract. If the explicit compensation contract is unobservable, the labor market needs to update its belief regarding the agent type on the basis of the realized outcome and the inference of the agent's effort choice. However, if the principal discloses contract clauses, the labor market knows how much effort is planned to be induced. The principal, then, can influence the market's belief through the observable contract. By disclosing contract clauses, the principal can induce a higher level of effort from the agent because she can control career concern incentives directly as well as monetary incentives.

© 2020 Yokohama Publications. All rights reserved. Based upon the solvability theorem of the system of linear equations we will establish the Kuhn-Fourier theorem and the Farkas-Minkowski lemma and related results. Our analyses are elementary and self-contained and perhaps the most basic way to deal with the problem. This will also clarify and simplify the nature of the former analyses based on linear inequalities. Then for applications we give simple proofs of the duality theorem for the linear programming and the minimax theorem in game theory based upon our results.