The form of incentive contracts: agency with moral hazard, risk neutrality, and limited liability

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dc.contributor.authorPoblete, Joaquin
dc.contributor.authorSpulber, Daniel
dc.date.accessioned2025-01-20T23:58:05Z
dc.date.available2025-01-20T23:58:05Z
dc.date.issued2012
dc.description.abstractThe analysis obtains a complete characterization of the optimal agency contract with moral hazard, risk neutrality, and limited liability. We introduce a critical ratio that indicates the returns to providing the agent with incentives for effort in each random state. The form of the contract is debt (a capped bonus) when the critical ratio is increasing (decreasing) in the state. An increasing critical ratio in the state-space setting corresponds to the hazard rate order for the reduced-form distribution of output, which we term the decreasing hazard rate in effort property (DHREP). The critical ratio also yields insights into agency with adverse selection.
dc.fuente.origenWOS
dc.identifier.doi10.1111/j.1756-2171.2012.00163.x
dc.identifier.eissn1756-2171
dc.identifier.issn0741-6261
dc.identifier.urihttps://doi.org/10.1111/j.1756-2171.2012.00163.x
dc.identifier.urihttps://repositorio.uc.cl/handle/11534/95230
dc.identifier.wosidWOS:000305512000001
dc.issue.numero2
dc.language.isoen
dc.pagina.final234
dc.pagina.inicio215
dc.revistaRand journal of economics
dc.rightsacceso restringido
dc.titleThe form of incentive contracts: agency with moral hazard, risk neutrality, and limited liability
dc.typeartículo
dc.volumen43
sipa.indexWOS
sipa.trazabilidadWOS;2025-01-12
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