Implementation with ex post hidden actions

We study implementation in settings where agents take strategic actions that influence preferences over mechanism outcomes and yet are hidden from the mechanism designer. We show that such settings can arise in entry auctions for markets, and that the Vickery-Clarke-Groves mechanism is not necessarily truthful. In this paper we first formalize so-called ex post hidden actions, we then characterize social choice functions that can be implemented in a way that is robust with respect to ex post hidden actions, and finally we propose a mechanism to do so. The model allows agents to have multi-dimensional types and to have quasi-linear utilities in money. We showcase these results by identifying social choice functions that can and cannot be implemented in entry auctions for Cournot competition models.

"Enhancement of the Contract Negotiation Process In Agency Relationships in IT Outsourcing A model for improving contract negotiations and the emergence of trust between principals and agents in IT outsourcing agency relationships"

The research aims at establishing an understanding of the influencing factors and their enhancement through a contract enhancement model (CEM) in order to ensure an improved course of contract negotiations between principals and agents in agency relationships in IT outsourcing. The research discusses the phenomenon of hidden actions and their occurrences, challenges and solutions as explained in the agency theory (JENSEN/MECKLING, 1976). The CEM helps to ensure that the phenomenon of hidden actions as well as opportunistic behaviour are reduced and maximation of benefit is given and shared between the parties. To guarantee a better understanding, the research sets the theoretical facts of the agency theory in conjunction with facts of other theories, such as economics and social cognitive science, in order to manifest the content of the CEM and to ensure that the theoretical framework of the research is based on solid grounds. The research contributes to theory and practice. It provides an enhanced approach for solving challenges arising from hidden actions. With the help of the CEM, the research instructs and guides interacting parties in agency relationships in IT outsourcing how to increase the speed, the efficiency and the effectiveness of their contract negotiations to enable them to develop a solid foundation for a long-lasting business relationship, from the very beginning. Previous research has been conducted in the field of enhancing relationships between principals and agents, but such research has focused on enhancing communication and knowledge transfer between the parties (Henrich, 2011). The present research is understood as a continuation of this previous research. As mentioned above, it aims at enhancing contract negotiations by making them more efficient and speeding them up to help principals and agents in agency relationships in IT outsourcing to run through the process of contract negotiations more effectively. Besides focusing on agency theory, the research also draws on literature in the field of outsourcing, trust and information exchange. In the past, various studies have shown that many outsourcing projects have failed to run for a prolonged period or have been interrupted, renegotiated or even terminated (Leimeister, 2010, p. 2). The literature shows that generally research has already contributed to this subject with a wide range of theories about the constitution and characterisation of mutual exchange between organisations (Kuhlmann, 2012, p. 3). Solving the conflict of information asymmetry as described in the agency theory will lead to an increase of total well-being and should be the aspired solution from a utilitarian point of view (Zaggl, 2012, p. 7).

Electoral Accountability and Responsive Democracy

We consider elections with hidden preferences and hidden actions, in which neither voters nor politicians can commit to future choices. When politicians are highly office motivated, they respond by choosing high policies to signal that they are above average, and some below-average politicians must randomise between choosing policies near their ideal points and mimicking above-average politicians by choosing high policies. If voter preferences are increasing, then elections deliver positive outcomes; but if voter preferences are single peaked, then politicians overshoot in the first period. Electoral incentives shift to sanctioning, rather than selection, as office motivation becomes large.

EVALUATION OF THE EFFICIENCY AND PROVISION OF PRACTICAL RECOMMENDATIONS ON THE FUNCTIONING OF THE RADIOELECTRONIC INTELLIGENCE SYSTEM IN THE INTERESTS OF PREPARATION AND STABILIZATION OF STABILIZATION

The military-political situation around Ukraine is characterized by high dynamics and instability of events and processes. Against the background of the above-mentioned task of the Armed Forces of Ukraine at the present stage of development is the intensification of intelligence in order to timely warn the top military-political leadership of Ukraine about possible open armed aggression of the Russian Federation, hidden actions of some other neighboring states that may threaten national interests. In the article on the basis of investigated influence of external and internal factors on the efficiency of the operation of the radio-electronic intelligence system in the interests of conducting a stabilization operation by grouping troops (forces) in the territory of Donetsk and Lugansk regions, using methods of analysis, synthesis and theory of probability, the evaluation of the efficiency of the electronic system's functioning, the capabilities of its forces and means to expose changes in the modes of operation of the armed forces, bringing to the highest levels of combat readiness K (forces), active prevention actions of illegal armed groups. The impact of the investigated factors on the performance evaluation indicated that the objective capabilities of the electronic intelligence system were not fully realized and, in some cases, significantly reduced. The paper evaluated the effectiveness of radio-electronic intelligence in the Joint Forces operation in the interest of preparation and conduct of the stabilization operation, which allowed to determine the direction of further research and to develop practical recommendations that made it possible to improve the efficiency of the electronic intelligence system with minimal cost.

Multi-layer agency problems in a non-profit and for-profit collaboration: a case study of a delicatessen product in support of a minority

The study investigated the collaboration between a non-profit and a for-profit organization and evaluated the benefits and drawbacks of the collaboration for the non-profit partner. The non-profit partner is a charitable organization that supports an ethnic minority in one of the least economically affluent European countries. The collaboration stemmed from a project, in which members of the minority cultivated and processed a delicatessen product for the market in more affluent European countries. The collaboration did not succeed to fully produce the desired results. It was negatively affected by inadequate communication, the absence of meta-goals, as well as classical and multi-level agency problems. In part due to the inexperience of both partners with such collaborations, the for-profit partner seems to have taken hidden actions. These actions did not contribute to the project goals, respectively jeopardized the goals and reputation of the non-profit partner.

A Solvable Dynamic Principal-Agent Model with Linear Marginal Productivity

We study how to design an optimal contract which provides incentives for agent to put forth the desired effort in a continuous time dynamic moral hazard model with linear marginal productivity. Using exponential utility and linear production, three different information structures, full information, hidden actions and hidden savings, are considered in the principal-agent model. Applying the stochastic maximum principle, we solve the model explicitly, where the agent’s optimization problem becomes the principal’s problem of choosing an optimal contract. The explicit solutions to our model allow us to analyze the distortion of allocations. The main effect of hidden actions is a reduction of effort, but the a smaller effect is on the consumption allocation. In the hidden saving case, the consumption distortion almost vanishes but the effort distortion is expanded. In our setting, the agent’s optimal effort is also reduced with the decline of marginal productivity.

Optimal Ramsey taxation with hidden actions

Purpose – The purpose of this paper is to study the problem of optimal Ramsey taxation in a finite-planning-horizon, representative-agent endogenous growth model including government expenditures as a productive input in capital formation and also with hidden actions. Design/methodology/approach – Technically, Malliavin calculus and forward integrals are naturally introduced into the macroeconomic theory when economic agents are faced with different information structures arising from a non-Markovian environment. Findings – The major result shows that the well-known Judd-Chamley Theorem holds almost surely if the depreciation rate is strictly positive, otherwise Judd-Chamley Theorem only holds for a knife-edge case or on a Lebesgue measure-zero set when the physical capital is completely sustainable. Originality/value – The author believes that the approach developed as well as the major result established is new and relevant.