Other regarding principal and moral hazard: the single agent case Report as inadecuate




Other regarding principal and moral hazard: the single agent case - Download this document for free, or read online. Document in PDF available to download.

Abstract

Using the classic moral hazard problem with limited liability we characterize the optimal incentive contracts when first an other-regarding principal interacts with a self-regarding agent. The optimal contract differs considerably when the principal is ‘inequity averse’ vis-a-vis the self-regarding case. Also the agent is generally weakly better-off under an ‘inequity averse’ principal compared to a ‘status seeking’ principal. Then we extend our analysis and characterize the optimal contracts when both other-regarding principal and other-regarding agent interact.



Item Type: MPRA Paper -

Original Title: Other regarding principal and moral hazard: the single agent case-

English Title: Other regarding principal and moral hazard: the single agent case-

Language: English-

Keywords: Other regarding preferences, self regarding preferences, inequity-averse, status- seeking, optimal contract-

Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior-





Author: Banerjee, Swapnendu

Source: https://mpra.ub.uni-muenchen.de/59654/



DOWNLOAD PDF




Related documents