This paper presents a stylized model based on the principal-agent framework in the absence of monetary instrument as a compensation device to agents with privately known production costs. Our results identify a new trade off that arises from alternative compensation devices, as well as the associated implications on firm’s profitability and consumer welfare.
Contract Design, Set-complement Instrument, Personalization
ISBN: [978-1-86435-644-1]; Full paper
Sin, Raymond G. and Jia, Jia, "Contracting For Personalization" (2011). PACIS 2011 Proceedings. Paper 178.