Optimal Duration of Contracts

In a joint research project with Panu Poutvaara, Andreas Wagener , is investigating the implications of moral hazard and adverse selection on the temporal structure of renewable contracts in a principal-agent relationship. In the presence of only moral hazard, all contracts in the sequence of contracts should be of moderate length, just preventing agents from shirking. With adverse selection only, contracts have a two-stage design: a short screening period to find out the agent’s type which, for good types, will be extended by a permanent contract. The aim of the project is to analyse how the joint occurrence of adverse selection and moral hazard affects contract durations.

Andreas Wagener's research interests are in the areas of public economics, in particular, taxation, tax competition and social policy, the theory of decision making under uncertainty, political economy and applied microeconomics. Recently, Andreas Wagener also has worked on applications of finite-player evolutionary game theory in public economics and on (mis-) perceptions of income inequality. While at CESifo, Andreas Wagener also plans to investigate these issues in more depth.

Andreas Wagener is Professor of Economics and Director of the Institute for Social Policy and of the Institute of Public Policy and Administration at the University of Hannover, Germany. He previously held positions as Professor and Associate Professor for Public Economics at the University of Vienna and the University of Siegen. He is Research Professor at Ifo's Center for International Institutional Comparisons and Migration Research and Guest Professor for International Taxation at the Vienna University of Economics and Business Administration. His doctorate and habilitation are from the University of Siegen.