Informed principal, moral hazard, and limited liability
نویسندگان
چکیده
I consider a moral hazard problem with risk neutral parties, limited liability, and an informed principal. The contractible outcome is correlated to both the principal’s private information agent’s hidden action. In contrast model without privately principal or show that first-best payoff cannot be implemented by any equilibrium mechanism.
منابع مشابه
Repeated moral hazard, limited liability, and renegotiation∗
We consider a repeated moral hazard problem, where both the principal and the wealth-constrained agent are risk-neutral. In each of two periods, the principal can make an investment and the agent can exert unobservable effort, leading to success or failure. Incentives in the second period act as carrot and stick for the first period, so that effort is higher after a success than after a failure...
متن کاملThe Cost of Moral Hazard and Limited Liability in the Principal-Agent Problem
In the classical principal-agent problem, a principal hires an agent to perform a task. The principal cares about the task’s output but has no control over it. The agent can perform the task at different effort intensities, and that choice affects the task’s output. To provide an incentive to the agent to work hard and since his effort intensity cannot be observed, the principal ties the agent’...
متن کاملAccident Risk, Limited Liability and Dynamic Moral Hazard∗
A firm is subject to accident risk, which the manager can mitigate by exerting effort. An agency problem arises because effort is unobservable and the manager has limited liability. The occurrence of accidents is modelled as a Poisson process, whose intensity is controlled by the manager. We use martingale techniques to formulate the manager’s incentive compatibility constraints and to study th...
متن کاملLimited liability constraints in adverse selection and moral hazard problems
This paper analyzes a principal-agent model in which the agent has private information before contracting with the principal and ex-post private decision. These inputs determine the random output accruing to the principal. We characterize the optimal menu of contracts between a risk-neutral principal and a risk-neutral agent when the agent has limited liability on his transfer or utility levels...
متن کاملInformed principal , moral hazard , and the value of a more informative technology
We analyze a principal-agent model with moral hazard in which the principal has private information about the technology. We characterize Perfect Bayesian Equilibria of the contracting game that possess the following properties: (i) a principal with a more informative technology ends up earning less profits than a principal with a less informative one does; (ii) compared to the complete informa...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Economic Theory Bulletin
سال: 2021
ISSN: ['2196-1085', '2196-1093']
DOI: https://doi.org/10.1007/s40505-021-00201-3