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Abstract

Using the classic moral hazard problem with limited liability we characterize the optimal incentive contracts when first an other-regarding principal interacts with a self-regarding agent. The optimal contract differs considerably when the principal is ‘inequity averse’ vis-a-vis the self-regarding case. Also the agent is generally weakly better-off under an ‘inequity averse’ principal compared to a ‘status seeking’ principal. Then we extend our analysis and characterize the optimal contracts when both other-regarding principal and other-regarding agent interact.



Item Type: MPRA Paper -

Original Title: Other regarding principal and moral hazard: the single agent case-

English Title: Other regarding principal and moral hazard: the single agent case-

Language: English-

Keywords: Other regarding preferences, self regarding preferences, inequity-averse, status- seeking, optimal contract-

Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior-





Autor: Banerjee, Swapnendu

Fuente: https://mpra.ub.uni-muenchen.de/59654/







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