Repeated moral hazard with effort persistence

• 成果类型: Article
• 署名作者: Jarque, Arantxa
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Richmond
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2010.03.017
• 发表日期: 2010
• 页码: 2412-2423
• 关键词: Moral hazard; Repeated agency; persistence

摘要

I study a problem of repeated moral hazard where the effect of effort is persistent over time: each period's outcome distribution is a function of a geometrically distributed lag of past efforts. I show that when the utility of the agent is linear in effort, a simple rearrangement of terms in his lifetime utility translates this problem into a related standard repeated moral hazard. The solutions for consumption in the two problems are observationally equivalent, implying that the main properties of the optimal contract remain unchanged with persistence. For illustration, I present the computed solution of an example. (C) 2010 Elsevier Inc. All rights reserved.