Transferable deposits as a screening mechanism

David Lagziel, Ehud Lehrer

Research output: Contribution to journalArticlepeer-review

Abstract

We design incentive schemes for portfolio managers that screen low-skill managers: only the best portfolio managers, in terms of expected payoffs, agree to participate in a single-period investment. The results hold in general financial markets, where uninformed investors face managers of different capabilities, and can only observe their one-stage realized returns.

Original languageEnglish
Pages (from-to)483-504
Number of pages22
JournalEconomic Theory
Volume71
Issue number2
DOIs
StatePublished - Mar 2021

Keywords

  • Investment game
  • Reward schemes
  • Screening problem

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