Optimal incentive contracts under moral hazard when the agent is free to leave

Arbeitspapier

We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free to leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal contracts may entail properties such as inducing first-best effort and surplus, or non-responsiveness with respect to changes in verifiable parameters. Moreover, while always socially inefficient, separation might occur in equilibrium. Except for the latter, these findings are robust to renegotiation. When the outside option is exogenous instead, the standard results obtain.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 5027

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Economics of Contract: Theory ; Asymmetric and Private Information; Mechanism Design ; Labor Law ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Thema: Moral hazard ; limited commitment ; ex-post outside option ; limited liability ; Anreizvertrag ; Arbeitsmobilität ; Moral Hazard ; Beschränkte Haftung ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Englmaier, Florian ; Muehlheusser, Gerd ; Roider, Andreas
• Ereignis: Veröffentlichung
• (wer): Institute for the Study of Labor (IZA)
• (wo): Bonn
• (wann): 2010

Weitere Informationen

• Handle: http://hdl.handle.net/10419/36974
• Letzte Aktualisierung: 01.03.2025, 11:44 MEZ