Arbeitspapier
Moral Hazard
When a principal and an agent operate with simple contracts, at equilibrium, renegotiation will occur after the action is taken. Also, since renegotiation makes incentive contracts non-credible, the principal may prefer non-renegotiable monitoring options. Current literature does not fully reconcile these predictions with the observation of simple non-renegotiated incentive contracts. We model a principal-agent interaction in a social learning framework, and assume that when renegotiation is not observed, players may forget its feasibility, with infinitesimal probability. The unique stable state of our model predicts that the second-best simple incentive contracts occur with non-negligible positive frequency.
- Sprache
-
Englisch
- Erschienen in
-
Series: Discussion Paper ; No. 1269
- Klassifikation
-
Wirtschaft
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Squintani, Francesco
- Ereignis
-
Veröffentlichung
- (wer)
-
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
- (wo)
-
Evanston, IL
- (wann)
-
1999
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Squintani, Francesco
- Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
Entstanden
- 1999
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