Three essays on learning and intertemporal incentives

The dissertation analyses in three separate essays the economics of learning and the provision of intertemporal incentives. The first chapter, examines the design of an optimal contract between a risk-neutral principal and a risk-averse agent. The agent\u27s choice and signal space is multi-dimensional and subject to moral hazard. The existence of an optimal contract is demonstrated and conditions for the validity of the first-order approach for the characterization of the optimal contract are given. The second chapter considers the situation where a single consumer buys a stream of goods from different sellers over time. The true value of each seller\u27s product is initially unknown. The cost of experimentation to the buyer is endogenous due to the price competition between the sellers. It is examined how strategic aspects of price competition between the sellers interact with the learning process of the consumer. The third chapter presents a dynamic contract model with two essential features: (i) earlier information is noisier than later information, (ii) the agent\u27s true ability in the assigned job is initially uncertain and can be learned over time. The analysis of the optimal choice between short-term and long-term contract is the central issue. It is shown that the optimal intertemporal learning policy reduces the underinvestment effect commonly observed in short-term contracts and may even lead to overinvestment relative to long-term contracts