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Optimal contract design under asymmetric information to incentivize preconditioning calves for feedlots

Leslie J. Verteramo Chiu et al.

Agricultural and Resource Economics Review2025https://doi.org/10.1017/age.2025.10article
AJG 1ABDC B
Weight
0.37

Abstract

We analyze the equilibrium conditions in which contracts are desirable for firms (buyers) with various levels of management efficiencies procuring a factor input under two levels of quality from supplies. The quality of the factor input, which affects production efficiency, may be known to the buyer; the efficiency of the firm is not known to the supplier. We estimate, using principal-agent models, that firms with high-management efficiency do not have the incentive to pay a quality premium to suppliers, but firms operating with low management efficiency are willing to offer a price premium for quality. The model is applied to the question of preconditioning cattle for the feedlot.

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https://doi.org/https://doi.org/10.1017/age.2025.10

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@article{leslie2025,
  title        = {{Optimal contract design under asymmetric information to incentivize preconditioning calves for feedlots}},
  author       = {Leslie J. Verteramo Chiu et al.},
  journal      = {Agricultural and Resource Economics Review},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1017/age.2025.10},
}

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Optimal contract design under asymmetric information to incentivize preconditioning calves for feedlots

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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