Moral hazard with bounded payments

• 成果类型: Article
• 署名作者: Jewitt, Ian; Kadan, Ohad; Swinkels, Jeroen M.
• 署名单位: Washington University (WUSTL); University of Oxford
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2007.12.004
• 发表日期: 2008
• 页码: 59-82
• 关键词: Principal-agent models; moral hazard; limited liability; COMPENSATION; options; Duality

摘要

We study the moral hazard problem with general upper and lower constraints M oil compensation. We characterize the optimal contract and show existence and uniqueness. When minimizing costs for given effort, a principal harmed by M will pay according to M on some range of outcomes; when M reflects limited liability or a minimum wage, the contract is option-like. When the principal also chooses effort, a principal harmed by M might nonetheless never pay according to M. This cannot occur if the cost. of inducing effort in the standard principal-agent problem is convex, for which we provide sufficient conditions related to the informativeness of outcome about effort. (C) 2008 Published by Elsevier Inc.