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| Wang, Yanguo; Jaenicke, Edward C.. |
| Existing research on tournament-style contests suggests that mechanisms to sort contestants by ability level are unnecessary in the case of linear relative-performance contracts. This paper suggests that this result stems from uniform treatment of workers' marginal returns from effort, marginal disutilities of effort, and reservation wages. Here, we investigate relative-performance contracts with a model that allows these three factors to vary by growers' unobservable ability. Given this framework, we find that it is possible for processors to improve expected profits and total expected welfare by replacing a single contract offering meant to pool all growers with an offering of two contracts meant to separate growers by ability. Under some... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Labor and Human Capital. |
| Ano: 2005 |
URL: http://purl.umn.edu/19522 |
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| Wang, Yanguo; Jaenicke, Edward C.. |
| With the broiler industry as a backdrop, this paper develops theoretical models to compare optimal incentives of pooled relative-performance and fixed-performance contracts in static and dynamic models that account for both adverse selection and moral hazard. In spite of some growers' complaints about the relative-performance contracts used in the broiler industry, model results largely justify the popularity and superiority of relative performance contracts relative to fixed performance contracts |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Research Methods/ Statistical Methods. |
| Ano: 2004 |
URL: http://purl.umn.edu/20406 |
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| Wang, Yanguo; Jaenicke, Edward C.. |
| Existing research on tournament-style contests suggests that mechanisms to sort contestants by ability level are unnecessary in the case of linear relative-performance contracts. This paper suggests that this result stems from uniform treatment of workers' marginal returns from effort, marginal disutilities of effort, and reservation wages. Here, we investigate relative-performance contracts with a model that allows these three factors to vary by growers' unobservable ability. Given this framework, we find that it is possible for processors to improve expected profits and total expected welfare by replacing a single contract offering meant to pool all growers with an offering of two contracts meant to separate growers by ability. Under some circumstances,... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Production Economics. |
| Ano: 2005 |
URL: http://purl.umn.edu/24639 |
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| Wang, Yanguo; Jaenicke, Edward C.. |
| We investigate the design of a two-period contract between an agricultural processor and growers whose quality-ability types are not observable to the processor. After characterizing the optimal contracts and establishing conditions for a separating equilibrium, we investigate how a payment based on first-period reputation may induce more first-period effort. We show that this reputation-based payment can improve both the processor's and the grower's welfare, resulting in a dominant equilibrium. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agribusiness. |
| Ano: 2005 |
URL: http://purl.umn.edu/19543 |
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| Jaenicke, Edward C.; Wang, Yanguo. |
| This paper embeds a principal-agent model of producer-processor equilibrium within a market equilibrium model of contract and cash markets to analyze the impact of contracting on the spot market for hogs. The principal-agent model incorporates both quality differentiation in the contract market and an endogenously determined cash market price to account for processor-producer relationships in equilibrium. For five types of contracting scenarios, market equilibrium conditions are derived, and results are presented for a numerical example. Contrary to previous results, the paper finds that the increased supply of hogs under typical formula-price contracts can increase the cash market price and reduce its variance. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Marketing. |
| Ano: 2004 |
URL: http://purl.umn.edu/20313 |
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