Dynamic Monitoring Design by Yu Fu Wong

Join us for another event in the Microeconomics Research Seminar Series, Autumn Term 2023.

Join Yu Fu Wong from the Department of Economics, University of Warwick, who will present their research on Dynamic Monitoring Design.

Abstract

This paper introduces flexible endogenous monitoring in dynamic moral hazard. A principal can commit to not only an employment plan but also the monitoring technology to incentivize dynamic effort from an agent. Optimal monitoring follows a Poisson process that produces rare informative signals, and the optimal employment plan features increasing entrenchment. To incentivize persistent effort, the Poisson monitoring takes the form of 'bad news' that leads to immediate termination. Monitoring is non-stationary: the bad news becomes more precise and less frequent. When persistent effort is not required, the optimal incentive scheme features a trial period of non-stationary monitoring, and a combination of Poisson bad news that leads to termination and Poisson good news that leads to tenure. 

This seminar will be held in the Economics Common Room on Monday 9 October 2023 at 4.00pm. This event is open to all levels of study and is also open to the public.

To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Microeconomics Research Seminar Series.