REPEATED MORAL HAZARD AND CONTRACTS WITH MEMORY: THE CASE OF RISK-NEUTRALITY

• 成果类型: Article
• 署名作者: Ohlendorf, Susanne; Schmitz, Patrick W.
• 署名单位: University of Cologne; University of Bonn
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/j.1468-2354.2012.00687.x
• 发表日期: 2012
• 页码: 433-452
• 关键词: limited-liability; long-term; Optimal incentives; RENEGOTIATION; AGENCY; COMMITMENT

摘要

We consider a repeated moral hazard problem where both the principal and the wealth-constrained agent are risk-neutral. In each of two periods, the agent can exert unobservable effort, leading to success or failure. Incentives provided in the second period act as carrot and stick for the first period, so that the effort level induced in the second period is higher after a first-period success than after a failure. If renegotiation cannot be prevented, the principal may prefer a project with lower returns; i.e., a project may be too good to be financed or, similarly, an agent can be overqualified.