Title: Dynamic Game of the Incentive and Monitoring in Principal-agent Relationship
Abstract:The incentive research of principal-agent is the most important, essential, and also difficult problem in the modern economics, because it involves the conflict of interest and the asymmetric informat...The incentive research of principal-agent is the most important, essential, and also difficult problem in the modern economics, because it involves the conflict of interest and the asymmetric information problems. This study combines the agent's effort level and the principal's monitoring and establishes the dynamic bargain game model which is more consistent with the actual situation of the principal-agent relationship. It shows that the rational agent will compare the integrated monitoring level and income of laziness and the types of incentive contract for agent is determined by the principal's comprehensive monitoring level. Then the supervision and incentive mechanism are complementary each other in the view of agent, and the monitoring mechanism and incentive contract may be alternative for the pricipal. So in order to encourage the agent to work harder and prevent the moral risk of agent, it needs not only to strengthen the intensity of incentive contract from positive, but also strengthen comprehensive supervision mechanism from negative.Read More
Publication Year: 2012
Publication Date: 2012-05-11
Language: en
Type: article
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