Arbeitspapier
Binary payment schemes: Moral hazard and loss aversion
We modify the principal-agent model with moral hazard by assuming that the agent is expectation-based loss averse according to Köszegi and Rabin (2006, 2007). The optimal contract is a binary payment scheme even for a rich performance measure, where standard preferences predict a fully contingent contract. The logic is that, due to the stochastic reference point, increasing the number of different wages reduces the agent's expected utility without providing strong additional incentives. Moreover, for diminutive occurrence probabilities for all signals the agent is rewarded with the fixed bonus if his performance exceeds a certain threshold.
- Sprache
-
Englisch
- Erschienen in
-
Series: Preprints of the Max Planck Institute for Research on Collective Goods ; No. 2010,38
- Klassifikation
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Personnel Management; Executives; Executive Compensation
Personnel Economics: Compensation and Compensation Methods and Their Effects
- Thema
-
Vergütungssystem
Asymmetrische Information
Moral Hazard
Risikoaversion
Prinzipal-Agent-Theorie
Vertragstheorie
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Herweg, Fabian
Müller, Daniel
Weinschenk, Philipp
- Ereignis
-
Veröffentlichung
- (wer)
-
Max Planck Institute for Research on Collective Goods
- (wo)
-
Bonn
- (wann)
-
2010
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Herweg, Fabian
- Müller, Daniel
- Weinschenk, Philipp
- Max Planck Institute for Research on Collective Goods
Entstanden
- 2010
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