arXiv subjects

Théo Durandard

Publications and source records attributed to Théo Durandard.

5 recordsLinked to original sources

arXiv2026

Robust Contracting for Sequential Search

A principal contracts with an agent who sequentially searches over projects to generate a prize. The principal is unaware of the agent's full set of projects and evaluates a contract by its worst-case performance. We characterize the principal's robustly optimal contracts, which are all debt-like: the agent is paid only when the prize exceeds a threshold. Debt is optimal because it preserves the agent's incentive to continue exploring, discouraging the agent from settling down for cheap, safe alternatives. Our predictions map to contracts used to incentivize innovation in practice.

econ.TH↗

arXiv2026

Existence, uniqueness, and regularity of solutions to nonlinear and non-smooth parabolic obstacle problems

We establish the existence, uniqueness, and $W^{1,2,p}$-regularity of solutions to fully-nonlinear, parabolic obstacle problems when the obstacle is the pointwise supremum of functions in $W^{1,2,p}$ and the nonlinear operator is required only to be measurable in the state and time variables. In particular, the results hold for all convex obstacles. Applied to stopping problems, they provide general conditions under which a decision maker never stops at a convex kink of the stopping payoff. The proof relies on new $W^{1,2,p}$-estimates for obstacle problems when the obstacle is the maximum of finitely many functions in $W^{1,2,p}$.

math.AP↗

arXiv2025

Robust Regulation of Labour Contracts

We study the robust regulation of contracts in moral hazard problems. A firm offers a contract to incentivise a worker protected by limited liability. A regulator restricts the set of permissible contracts to (i) improve efficiency and (ii) protect the worker. The regulator faces uncertainty about both the worker's actions and the firm's production cost, and evaluates regulations based on their worst-case regret. The regret-minimising regulation mandates a minimum piece rate compensation for the worker. This rule simultaneously guarantees a fair share for the worker and preserves enough contractual flexibility to provide incentives.

econ.TH↗

arXiv2024

Comparative Statics for Optimal Stopping Problems in Nonstationary Environments

How do decisions change with the economic environment and with time? This paper studies general nonstationary stopping problems and provides the methodological tools to answer these questions. First, we identify conditions that ensure a monotone relation between decisions' timing and outcomes. These conditions apply to a prevalent class of economic environments. Second, we develop a theory of monotone comparative statics for stopping problems, offering general and unifying qualitative insights into the decision-maker's value and stopping behavior. We apply our results to models of information acquisition, bankruptcy, irreversible investment, and option pricing to explain documented patterns at odds with current theories.

econ.TH↗

arXiv2023

Dynamic delegation in promotion contests

I study how organizations assign tasks to identify the best candidate to promote among a pool of workers. Task allocation and workers' motivation interact through the organization's promotion decisions. The organization designs the workers' careers to both screen and develop talent. When only non-routine tasks are informative about a worker's type and non-routine tasks are scarce, the organization's preferred promotion system is an index contest. Each worker is assigned a number that depends only on his own type. The principal delegates the non-routine task to the worker whose current index is the highest and promotes the first worker whose type exceeds a threshold. Each worker's threshold is independent of the other workers' types. Competition is mediated by the allocation of tasks: who gets the opportunity to prove themselves is a determinant factor in promotions. Finally, features of the optimal promotion contest rationalize the prevalence of fast-track promotion, the role of seniority, or when a group of workers is systemically advantaged.

econ.TH↗