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The present inquiry addresses the nexus between the development of electronic government and corruption in the provision of public sector services in developing and transition economies. The study analyzes the potential contribution of electronic government in combating petty corruption within the framework of two superimposed principal-agent model and show that electronic government could potentially limit bureaucratic corruption. To address the research question empirically, the study applies random tobit and linear random effects panel estimators to a dataset made of 121 countries, which covers the time period between 2008 and 2018. Estimations reveal that the adoption of electronic government in the delivery of public sector services has been the central factor that contributed to the reduction of petty corruption in developing and transition economies. The level of per capita income, political rights, civil liberties and share of natural resources in gross exports also correspond with less bribery in the public sector service delivery. Furthermore, the study finds that a lower level of socio-economic development corresponds with a greater level of petty corruption. Hence, e-government presents one of the utmost opportunities for socio-economic development and offers solutions for the improvement of the efficiency and effectiveness of public administration. [ABSTRACT FROM AUTHOR]

In the context of "dual carbon" objectives, ESG investment concept has received wide attention. In this paper, based on stochastic systems and stakeholder theory, we analyze the interest requirements of subject stakeholders and investigate the agency conflict and coordination problems in the system. Combining with the contract theory, we construct a continuous-time principal-agent model with ambiguity aversion under ESG rating Knightian uncertainty. By the method of stochastic calculus in multiple priors, we derive the HJB equation for the optimal dynamic contract value function based on ESG rating Knightian uncertainty under incentive compatibility conditions. Then, for different ESG rating levels, through numerical simulation, we discuss the impact of the Knightian uncertainty degree of ESG rating on the optimal contract. The study shows that as the Knightian uncertainty degree of ESG rating increases, companies are more inclined to green development and the maximum expected return of principals decreases. [ABSTRACT FROM AUTHOR]

This article interrogates the development of the European Border and Coast Guard (Frontex) and its implications for the EU's approach to border control coordination. Through the theoretical lens of the principal-agent model, it investigates information asymmetry and friction between stakeholders in the implementation of Frontex's increased competence at the borders. The findings of this article show that the development of Frontex has led to growing incentives for the EU's supranational institutions to steer the agency to pursue their individual objectives, creating new supranational elements in EU border management. [ABSTRACT FROM AUTHOR]

We examine a continuous-time reinsurance contracting problem, where the reinsurer (principal) and the insurer (agent) disagree about the resolution of claim process. We illustrate the reinsurance contract design in an application with Bayesian learning. In the principal–agent framework, the reinsurer dynamically decreases the equilibrium reinsurance price instead of keeping it a constant. However, the reinsurance price increases about the belief differences. Both of these two opposite effects on the reinsurance price induce the insurer's demand for reinsurance to first increase and then decrease with respect to decision time as the belief differences increase. Moreover, disagreement results in the relatively pessimistic insurer's risk-taking behavior by raising risk retention as claim volatility increases. Furthermore, we find that when the belief differences are not too large, the reinsurer with belief differences and learning obtains greater satisfaction than the standard one. [ABSTRACT FROM AUTHOR]

Recent major corruption cases in Belgium center around arm's length public institutions. Is there is a specific relationship between governance mechanisms and corruption in such institutions that weakens their accountability? To answer this question, the principal-agent framework was applied to two Belgian case studies. This study supports the hypothesis that New Public Management reforms, such as decentralization and diminishing state intervention have rendered the character of corruption more sophisticated. The study also shows how failures in governance mechanisms led to corruption, but more importantly how corruption, both by the agent and by the principal, contributed to that failure in the first place. Consociationalism and partitocracy, characteristic of the Belgian political system, are important contextual elements that help explain this relationship between governance and corruption, and suggest that the observed corruption is probably not exceptional. To better prevent corruption in arm's length public institutions, the focus should be on strengthening the independence and expertise of members in governance structures, ensuring the independence of the audit and regulatory functions, and investing the limited means available to fight corruption in the principal-agent relationship rather than in the agent-client relationship. [ABSTRACT FROM AUTHOR]

This paper first studies the optimal reinsurance problems for two competitive insurers and then studies the optimal reinsurance premium pricing problem for their common reinsurer by using the dynamic programming technique. The two insurers are subject to common insurance systematic risk. Each purchases proportional or excess-of-loss reinsurance for risk control. They aim to maximize the expected utilities of their relative terminal wealth. With the insurers' optimal reinsurance strategies, the reinsurer decides the reinsurance premiums for each insurer, also aiming to maximize the expected utility of her terminal wealth. Thus, the optimal reinsurance pricing problem is formulated as a Stackelberg game between two competitive insurers and a reinsurer, where the reinsurer is the leader, and the insurers are followers. Besides, all three players take model ambiguity into account. We characterize the optimal strategies for the insurers and the reinsurer and provide some numerical examples to show the impact of competition and model ambiguity on the pricing of reinsurance contracts. [ABSTRACT FROM AUTHOR]

We analyse workplace monitoring in a principal–agent model with two types of workers who differ in their productivity. The firm decides on the effort level, the wage and the monitoring intensity for both workers. We find that the elasticities of the workers' effort-cost function and the firm's monitoring-cost function affect the firm's monitoring intensity. Our results imply that the firm might monitor the low-productive worker more closely than the high-productive worker. [ABSTRACT FROM AUTHOR]

In this paper, a constraint set swelling homotopy (CSSH) algorithm for solving the single-level non-convex programming problem with designing piecewise linear contractual function which is equivalent to the principal-agent model with integral operator is proposed, and the existence and global convergence is proven under some mild conditions. As a comparison, a piecewise constant contract is also designed for solving the single-level non-convex programming problem with the corresponding discrete distributions. And some numerical tests are done by the proposed homotopy algorithm as well as by using fmincon in Matlab, LOQO and MINOS. The numerical results show that the CSSH algorithm is robust, feasible and effective. [ABSTRACT FROM AUTHOR]

In a standard principal-agent setting, we use a comparative approach to study the incentives provided by different types of compensation contracts, and their valuation by managers with utility functionuwho are risk averse (u″<0) and prudent (u″′>0). We show that concave contracts tend to provide more incentives to risk averse managers, while convex contracts tend to be more valued by prudent managers. This is because concave contracts concentrate incentives where the marginal utility of risk averse managers is highest, while convex contracts protect against downside risk. Thus, managerial prudence can contribute to explain the prevalence of stock-options in executive compensation. However, convex contracts are not optimal when the principal is sufficiently prudent relative to the manager. [ABSTRACT FROM PUBLISHER]

To fully understand the function of volatility in today's European democracies, it is necessary to employ the principal-agent model. Where democracy is exercised in the form of party government, then it is especially essential to enquire into how the electorate can monitor politicians. Electoral volatility may increase the responsiveness of the party system to the electorate and increase the accountability of politicians. Party system instability is persistently higher in the east European democracies than in western Europe. System transition in eastern Europe passes through the party system, as new parties enter the electoral arena. Political innovation in western Europe also passes through the party system, where new movements appear alongside the established parties. However, there are signs of decreasing volatility in the east, whereas volatility is on the rise in several west European democracies. There will be convergence between west and east European democracies: both will experience considerable volatility in the future. This is a positive gain for democratic vitality in Tingsten's conception. The level of party system fractionalization is already the same over the regions of Europe. The principal-agent model would favour several agents as well as agent switches, which means a moderate level of party system instability. [ABSTRACT FROM AUTHOR]

This paper presents a model of educational production that tries to make sense of recent evidence on effects of institutional arrangements on student performance. In a simple principal-agent framework, students choose their learning effort to maximize net benefits, while the government chooses educational spending to maximize its net benefits. In the jointly determined equilibrium, schooling quality is shown to depend on several institutionally determined parameters. The impact on student performance of institutions such as central examinations, centralization versus school autonomy, teachers' influence, parental influence, and competition from private schools is analyzed. Furthermore, the model can rationalize why positive resource effects may be lacking in educational production. [ABSTRACT FROM AUTHOR]

This paper appeals to UK evidence on venture capital. The investor is regarded as the principal, and the investee as the agent. Relations between the two are analysed in terms of risk management, information handling, and the trading of risk and information. In the data analysed, investors and investees are paired in 'dyads'. The evidence on their behaviour and interaction was obtained by face-to-face interviews. A principal-agent model is developed to deal with incentives for entrepreneurial effort. From this, issues of information and monitoring naturally arise. Then the seeking of contract optimality in real contexts is examined, applying this framework to qualitative data. It is argued that evidence viewed in this way supports the application of principal-agent modelling to the financing of mature small firms by venture capitalists. The feature of contract optimality that was perceived to be most important was capital structure. There were several reasons for this: establishing ownership entitlement; creating incentives for effort; and apportioning risk efficiently. Often the observed relations between investor and investee were perceived to be at or close to optimality. It was found that these optima were specific to time and place, and strongly reflected the house-styles of individual investors and their reputations. [ABSTRACT FROM AUTHOR]