Editorial Reviews. Review. “Incentive theory is at the very core of economics. This text is a In this book, Jean-Jacques Laffont and David Martimort present the most thorough yet accessible introduction to incentives theory to date. Central to . David Martimort at Ecole d’├ęconomie de Paris le principal ne dispose pas de moyens pour observer les actions de l’agent (voir Laffont et Martimort, ). Jean-Jacques Laffont and David Martimort, The Theory of Inc tives. The Principal – Agent Model, Princeton and Oxford: Princet. University Press , pp.

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This book focuses on the principal-agent model, the “simple” situation where a principal, or company, delegates a task maryimort a single agent through a contract–the essence of management and contract theory. How does the owner or manager of a firm align the objectives of its various members to maximize profits?

Following a brief historical overview showing how the problem of incentives has come to the fore in the past two centuries, the authors devote the bulk of their work to exploring principal-agent models and various extensions thereof in light of three types of information problems: Offering an unprecedented look at a subject vital to industrial organization, labor economics, and behavioral economics, this book is set to become the definitive resource for students, researchers, and others who might find themselves pondering what contracts, and the incentives they embody, are really all about.

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This text is a masterly exposition of the modern theory by one of the pioneers of the field, Jean-Jacques Laffont, together with one of its rising stars, David Martimort.

It is indeed a fine contribution to the economics literature. The time is ripe for a synthesis and systematization.

Jean-Jacques Laffont has been one of the most important contributors to the field over the years, and David Martimort has shown his capacity for highly original work. This book, dealing with the basic models of the field, combines clarity, thoroughness, and great respect for historical development. Would you like to tell us about a lower price? Economics has much to do with incentives–not least, incentives to work hard, to produce quality products, to study, to invest, and to save.

Although Adam Smith amply confirmed this more than two hundred years ago in his analysis of sharecropping contracts, only in recent decades has a theory begun to emerge to place the topic at the heart of economic thinking.


In this book, Jean-Jacques Laffont and David Martimort present the most thorough yet accessible introduction to incentives theory to date. Central to this theory is a simple question as pivotal to modern-day management as it is to economics research: What makes people act in a particular way in an economic or business situation?

In seeking an answer, the authors provide the methodological tools to design institutions that can ensure good incentives for economic agents. Read more Read less. Discover Prime Book Box for Laftont.

Jean-Jacques Laffont | IDEAS/RePEc

Enter your mobile number or email address below and we’ll send you a link to download the free Kindle App. Kindle Cloud Reader Read instantly in your browser. Customers who bought this item also bought. Page 1 of 1 Start over Page 1 of 1. Economics for the Common Good. Thinking, Fast and Slow. Administrative Behavior, 4th Edition: Advances in Financial Machine Learning. Editorial Reviews Review “Incentive theory is at the very core of economics.

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Please try again later. This book is really good for people studying contract theory and with some knowledge of game theory. Slightly advanced, but really good. This book is tremendously well written. I had been struggling to acheive a full master on Theory of Incentives, The Principal-Agent model, and always reading well-referred books, but none succeeded to combine matematical rigor, simplicity and clearness as Laffon and Martimort.

A must read book to anyone interested in this topic. I have read margimort criticism to their notation, but they are actually pretty standard in the IO literature and in contract theory as well. Laffont The Source, in englishis indeed the best source. Congratulations to the authors. The Theory of Incentives: The book provides a systhesis of contract theory at the phd level.

It begins marti,ort basic idea magtimort adverse selection and then its martkmort and followed by basic moral hazard model and its extension. The selected topics are presented here in a consistent fashion of the main ideas. Applications are well presented along the models.

Nonverifiability, the mixed model of adverse selection and moral hazard and some dynamic aspects of the two are also incorporated in a great deal of details.

This is the text on incentive theory, not just introduction. Its comprehensive insights are useful and time-saving for readers. You need not to read a bulk of papers, after reading the book, you just complement it with some core papers of the topics. Anyways, i found it helpful and complete for studying incentive theory but it requires deep understanding of optimization theory and some experience of economic-theorethic arguments.


This book is written by a major contributor of the field. It would be hard to write another book to compete with this one in the field. For praise of this textbook, read the other reviews.

The reason 5 stars is not given, is primarily because I find the choice of notation extremely confusing.

I just can’t stand the overbar-underbar notation for distinguishing types, and I find no compelling reason to do so compared to subscript notation used in e. Bolton and Dewatripont – Contract Theory. The notation is survivable until there are 3 types where underbar, hat and overbar is used.

I’m convinced the material would be easier to understand had the notation been more conventional. Maybe I’m the only one who “read equations loud in my head”? At least for me, the incentive constraint for “type 2” is easier to grasp than the incentive martimmort for “type underbar”. The material is difficult enough as it is, maryimort make it harder by confusing notation!

This book rates 5 stars because it is suprisingly easy to read for such a heavy deep subject. The examples and qoutes are well place and very illustrative. I would very much recommend this book. The most outstanding aspect is the way it approaches the theories on a small scale and expands them incrementally to secure the laffont understanding at each stage of the “flow”.

I had a project work. But this book is a gem. I got what I wanted in less than two days. Martmort am an average student and the various models and extensions are very helpful in understanding the material.

Jean-Jacques Laffont

I love the cover and the color combination also. I dont have it now. But will buy one.

Give it a try. See all 7 reviews. Amazon Giveaway allows you to run promotional giveaways in order to create buzz, reward your audience, and attract new followers and customers. Learn kaffont about Amazon Giveaway.

The Theory of Incentives

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