Optimal incentives schemes under homo moralis preferences

Artikel

This study focuses on the optimal incentive schemes in a multi-agent moral hazard model, where each agent has other-regarding preferences and an individual measure of output, with both being observable by the principal. In particular, the two agents display homo moralis preferences. I find that, contrary to the case with purely selfish preferences, tournaments can never be optimal when agents are risk averse, and as the degree of morality increases, positive payments are made in a larger number of output realizations. Furthermore, I extend the analysis to a dynamic setting, in which a contract is initially offered to the agents, who then repeatedly choose which level of effort to provide in each period. I show that the optimal incentive schemes in this case are similar to the ones obtained in the static setting, but for the role of intertemporal discounting.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Games ; ISSN: 2073-4336 ; Volume: 12 ; Year: 2021 ; Issue: 1 ; Pages: 1-22 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft
• Subject: homo moralis preferences ; moral hazard in teams ; optimal contracts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sarkisian, Roberto
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2021

Further information

• DOI: doi:10.3390/g12010028
• Handle: http://hdl.handle.net/10419/257510
• Last update: 10.03.2025, 11:45 AM CET