Participation in moral hazard problems

• 成果类型: Article
• 署名作者: Roger, Guillaume
• 署名单位: University of Sydney
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2015.11.005
• 发表日期: 2016
• 页码: 10-24
• 关键词: Moral hazard; asymmetric information; CONTRACT; Participation constraint; Principal-agent

摘要

Two principals engage in Hotelling competition for an agent's services under incomplete information as to her outside option (location). This renders the agent's participation decision probabilistic from the perspective of each principal. Regardless of the market structure at equilibrium the optimal contract features a trade-off between participation probability and incentives. Rent and effort are inversely related and non-monotonic in the agent's transport cost and so in market structures; they increase (decrease) with competition. Uncertainty as to the agent's location may increase or decrease the rent compared to full information. This correspondingly harms or benefits principals. (C) 2016 Elsevier Inc. All rights reserved.