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on Contract Theory and Applications |
| By: | Ron van der Meyden |
| Abstract: | Convertible instruments are contracts, used in venture financing, which give investors the right to receive shares in the venture in certain circumstances. In liquidity events, investors may have the option to either receive back their principal investment, or to receive a proportional payment after conversion of the contract to a shareholding. In each case, the value of the payment may depend on the choices made by other investors who hold such convertible contracts. A liquidity event therefore sets up a game theoretic optimization problem. The paper defines a general model for such games, which is shown to cover all instances of the Y Combinator Simple Agreement for Future Equity (SAFE) contracts, a type of convertible instrument that is commonly used to finance startup ventures. The paper shows that, in general, pure strategy Nash equilibria do not necessarily exist in this model, and there may not exist an optimum pure strategy Nash equilibrium in cases where pure strategy Nash equilibria do exist. However, it is shown when all contracts are uniformly one of the SAFE contract types, an optimum pure strategy Nash equilibrium exists. Polynomial time algorithms for computing (optimum) pure strategy Nash equilibria in these cases are developed. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.12237&r= |
| By: | Cattani, Luca; Dughera, Stefano; Landini, Fabio (University of Turin) |
| Abstract: | The drivers of large within-industry heterogeneity in the use of non-standard employment are still poorly understood. Specifically, there is little evidence on how firm-specific factors related to the organization of work affect the diversity of hiring decisions. This paper contributes to this line of research by studying the existence of interlocking complementarities between job design and labour contract at the firm level. Using a formal model, we show that firms face two organizational equilibria: one in which job designs with high routine task intensity are matched with a large use of non-standard contracts; and the other in which low routine task intensity combines with a small use of non-standard contracts. These complementarities exist because while non-standard contracts allow firm to adjust to external shocks, they also provide little incentive to invest in firm-specific knowledge. Since the cost associated with the lack of such knowledge is lower (higher) in firms with high (low) routine task intensity, they are also more (less) likely to use this type of contracts. We test the predictions of our model using linked-employer-employee data from the Emilia-Romagna region. We build an index of firm's routine task intensity by matching information from INAPP data at the occupation level. The empirical evidence is consistent with our theory: the use of non-standard contracts is positively associated with routine task intensity at the firm level. This result holds controlling for a wide range of firm-specific and contextual covariates and it is robust to alternative estimation methods (OLS, panel and IV). The related managerial and policy implications are discussed. |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:202114&r= |
| By: | Bernard Fortin; Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Bruce Shearer |
| Abstract: | Based on linked administrative and survey panel data, we analyze the labour supply behaviour of physicians who could adopt either a standard fee-for-service contract or a mixed remuneration (MR) contract. Under MR, physicians received a per diem and a reduced fee for services provided. We present estimates of a structural discrete choice model that incorporates service intensity (services provided per hour) and contract choice into a labour supply framework. We use our estimates to predict (ex ante) the effects of contracts on physician behaviour and welfare, as measured by average equivalent variations. The supply of services is reduced under a MR contract, suggesting incentives matter. Hours spent seeing patients is less sensitive to incentives than the supply of services. Our results suggest that a reform forcing all physicians to adopt the MR system would have substantially larger effects on physician behaviour than were measured under the observed reform. A pure salary (per diem) reform would sharply reduce services but would increase time spent seeing patients. |
| Keywords: | Practice Patterns of Physicians,Labour Supply,Service Intensity,Fee-for-Service Contract,Mixed Remuneration Contract,Discrete Choice Models |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-03426996&r= |
| By: | François Maréchal (CRESE - Centre de REcherches sur les Stratégies Economiques (EA 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]); Pierre-Henri Morand (LBNC - Laboratoire Biens, Normes, Contrats - AU - Avignon Université) |
| Abstract: | This article analyzes the use of social and environmental clauses in public procurement contracts. After describing the current French legal context, it shows how a mechanism design approach can explain the factors that theoretically justify such practices, potentially including favoritism and rent-seeking. An empirical analysis is then carried out on the French public procurement data set for the year 2017. It illustrates the weight of political preferences in the choice to resort to social clauses and the weight of the preferences of the local chief executive to explain the use of environmental clauses. It also highlights that social and environmental clauses do not seem to be used as a tool for favoritism. |
| Keywords: | Public procurement,social clauses,environmental clauses,favoritism |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03418572&r= |