The optimal contract can be implemented with a call option on the project payoff.
Drugs with questionable efficacy would be scored with a lower Q, meaning that their intrinsic project payoff would also be lower.
Indeed, entrepreneurs benefiting from superior information about the innovation profitability might be tempted to take project payoffs and defaulting on the debt, when the parties adopted such a contract.
A projected multimillion-euro payoff can only compound that.
At Simons's gathering, the participants were encouraged to propose projects whose payoff might not be immediate.
We consider the design of contracts that pay managers on the basis of a project's payoff.
The "gray income" comes from many sources, including gifts to officials at weddings, profits from land transfers, kickbacks from construction projects and payoffs from state monopolies like the tobacco industry, the study said.
Some of the project's payoffs are immediate.
In recent years, the agency has focused more on bankrolling projects with shorter completion times and concrete, applied goals, in place of the high-risk, long-term payoff projects that made DARPA so successful in its early years.
It was a big and expensive project, but the payoff would have been huge.
