Title: Implementing high‐powered contracts to motivate intertemporal effort supply
Abstract:We characterize the optimal contract between a principal and a risk‐neutral, wealth‐constrained agent when an adverse selection problem follows a moral hazard problem. The optimal contract in this set...We characterize the optimal contract between a principal and a risk‐neutral, wealth‐constrained agent when an adverse selection problem follows a moral hazard problem. The optimal contract in this setting often is more steeply sloped for the largest output levels than is the optimal contract in either the standard moral hazard setting or the standard adverse selection setting. The large incremental rewards for exceptional performance motivate the agent to deliver substantial effort both before and after he acquires privileged information about the production environment.Read More
Publication Year: 2009
Publication Date: 2009-05-04
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 20
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