The Theory of Moral Hazard and Unobservable Behaviour: Part I

S-Tier
Journal: Review of Economic Studies
Year: 1999
Volume: 66
Issue: 1
Pages: 3-21

Authors (1)

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Principal-agent models are studied, in which outcomes conditional on the agent's action are uncertain, and the agent's behaviour therefore unobservable. For a model with bounded agent's utility, conditions are given under which the first-best equilibrium can be approximated arbitrarily closely by contracts relating payment to observable outcomes. For general models, it is shown that the solution may not always be obtained by using the agent's first-order conditions as constraint. General conditions of Lagrangean type are given for problems in which contracts are finite-dimensional.

Technical Details

RePEc Handle
repec:oup:restud:v:66:y:1999:i:1:p:3-21.
Journal Field
General
Author Count
1
Added to Database
2026-01-26