Excellent Video. Helpful! Just one small thing: it seems easier to calculate Wh and Wl by multiplying the High Effort equation with 2, and subtracting from the Low Effort Equation to get the values of Wh and/or Wl
Hello Dr. Burkey, I was wondering if you could teach us some finance application of these two topics. Both videos are kind of advance and probably you could point us some research-oriented lectures as well. would you pls bring some lectures where it has (Mechanism design and contract theory)direct application in finance/financial economics. Thanks for these two great lectures. I appreciate the time you spent.
Thank you so much for the video! Your video is very easy to understand! Would it be possible for you to quickly go through the case when the agent is risk neutral? How would the two constraints (participation constraint and incentive compatibility) look like in this case (binding/non-binding)? I am a bit confused about when and whether these two constraints are binding.
Thanks for the feedback- I'll try to have a look at this, but I am thoroughly slammed with work right now, so I doubt I'll be able to get to it anytime soon.
Thanks for th video. This is excellent. One question, when you search for WH when trying to induce low effort, how do you get 4WL - 120 √WL + 900? I take the participation constraint and when solving for WH I am missing the "'-120√wl".
Starting with 1/3√WH+2/3√WL=10, move to the RHS, 1/3√WH=10-2/3√WL. Multiply through by 3, √WH=30-2√WL. Now you use the FOIL method on the RHS when you square both sides. The RHS becomes 900-60√WL-60√WL+4WL.
Thank you for your helpful video, do you know how the problem will be if the agent here, is principal in another contract, when they should be optimized simultaneously?
I've been struggling literally for days to wrap my head around this stuff, and in less than an hour you explain it beautifully. Thank you!
Excellent! I am glad I helped!
Great! I wish there were more variants of the P-A problems from MWG's Microeconomic Theory.
Excellent Video. Helpful!
Just one small thing: it seems easier to calculate Wh and Wl by multiplying the High Effort equation with 2, and subtracting from the Low Effort Equation to get the values of Wh and/or Wl
Hello Dr. Burkey, I was wondering if you could teach us some finance application of these two topics. Both videos are kind of advance and probably you could point us some research-oriented lectures as well. would you pls bring some lectures where it has (Mechanism design and contract theory)direct application in finance/financial economics. Thanks for these two great lectures. I appreciate the time you spent.
thank u, very clear explanation :)
Thank you so much for the video! Your video is very easy to understand! Would it be possible for you to quickly go through the case when the agent is risk neutral? How would the two constraints (participation constraint and incentive compatibility) look like in this case (binding/non-binding)? I am a bit confused about when and whether these two constraints are binding.
Thanks for the feedback- I'll try to have a look at this, but I am thoroughly slammed with work right now, so I doubt I'll be able to get to it anytime soon.
Nice video, thank you!!
Thanks for th video. This is excellent. One question, when you search for WH when trying to induce low effort, how do you get 4WL - 120 √WL + 900? I take the participation constraint and when solving for WH I am missing the "'-120√wl".
Starting with 1/3√WH+2/3√WL=10, move to the RHS, 1/3√WH=10-2/3√WL. Multiply through by 3, √WH=30-2√WL. Now you use the FOIL method on the RHS when you square both sides. The RHS becomes 900-60√WL-60√WL+4WL.
Oops, thank you so much! :)
thanks for this video. still one of the best. Do you have any video on "hidden Information" ?
Welcome! Nothing on adverse selection/hidden information yet- if you have an example type of problem you'd like to see, let me know.
@@BurkeyAcademy the credit market please! I.e. lending and borrowing
Thank you for your helpful video, do you know how the problem will be if the agent here, is principal in another contract, when they should be optimized simultaneously?
You should be solving it step by step especially calculation part