Goal-Oriented Agents in a Market

• Authors: Nicolas Quérou, David Pérez-Castrillo and Inés Macho-Stadler.
• BSE Working Paper: 1190 | July 20
• Keywords: Incentives , matching market , goal-oriented agents
• JEL codes: D82, D86
• Incentives
• matching market
• goal-oriented agents

We consider a market where “standard” risk-neutral agents coexist with “goal-oriented” agents who, in addition to the expected income, seek a high-enough monetary payoff¤ (the “trigger”) to fulfill a goal. We analyze a two-sided one-to-one matching model where the matching between principals and agents and the incentive contracts are endogenous. In any equilibrium contract, goal-oriented agents are matched with the principals with best projects and receive the trigger with a positive probability. Moreover, goal and monetary incentives are complementary since goal- oriented agents receive stronger monetary incentives than standard agents. Finally, we discuss policy interventions in relevant environments.