Supplementary Appendix to: Identifying and Testing Models of Managerial Compensation

This appendix includes extensions and supplemental materials for the model, iden-ti cation, and estimation discussed in Gayle and Miller (2014). Section A presents a dynamic hybrid moral hazard (HMH) model and proves that the optimal long-term contract can be implemented as a sequence of short-term contracts, analogous to the static HMH contract analyzed in the main text. Section B analyses identi\u85cation of the PMH1 model with shrinking contracts. Section C analyses identi\u85cation in the PMH2 model. It derives identi\u85cation and discusses how to use exclusion restrictions to potentially narrow the identi\u85ed set. Section D extends identi\u85cation results to accommodate unobserved heterogeneity with long panels. Section E gives details on the empirical implementation of the application presented in the main text. All proofs are collected in Section F. A A Dynamic HMH Model This section develops the notation for a dynamic version of the HMH model, lays out the feasibility constraints for the optimization problem, and then shows that the optimal contrac