Research at the chair of microeconomics mainly focuses on contract theory, i.e., the design and effects of incentives, as an innovative branch of microeconomic theory. More precisely, research activities are conducted in the following three subfields:
Dynamic Contract Theory: Repeated multilateral interaction with asymmetric information is common in many real-world situations. The formal analysis of such settings allows to gain insights about the effectiveness and potential failures of incentives with vast practical implications.
Behavioral Contract Theory: Economic agents do not always behave in a fully rational manner, which affects the design of contracts and their effectiveness. Behavioral contract theory explores the impact of behavioral phenomena, such as loss aversion and time-inconsistent preferences, on the implemented incentive mechanisms.
Contract Theory as a Microfoundation: Financial contracts, for example in the banking or insurance context, are frequently encountered at the foundation of macroeconomic models. The design of such contracts can entail striking consequences for the macro level.