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Mathematics Colloquium

Florida State University

Title: The agency problem with noise mitigation
Date: Friday, August 31, 2018
Place and Time: Room 101, Love Building, 3:35-4:25 pm
Refreshments: Room 204, Love Building, 3:00 pm

Abstract. The agency problem is one of the most influential problems in economics and earned Oliver Hart and Bengt Holmström their Nobel prize. It deals with an agent who is under a contract to provide an output for a principal. In return, the principal must pay her according to their agreement. The agent effort is not observed by the principal; while the principal only observes the output, he cannot tell the agent's action or lack thereof apart from the external noise. We provide an overview of the agency problem and present some of our recent results for the case when the principal can reduce the noise by paying a cost.