Contracting with private rewards

A-Tier
Journal: RAND Journal of Economics
Year: 2020
Volume: 51
Issue: 2
Pages: 589-612

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

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

Abstract

The canonical moral hazard model is extended to allow the agent to face endogenous and noncontractible uncertainty. The agent works for the principal and simultaneously pursues outside rewards. The contract offered by the principal thus manipulates the agent's work–life balance. The participation constraint is slack whenever it is optimal to distort the agent's work–life balance away from life compared to a symmetric‐information benchmark. Then, the agent's expected utility is high and he faces flatter incentives. Such contracts may be optimal when the two activities are strong substitutes in the agent's cost function or when reservation utility is low.

Technical Details

RePEc Handle
repec:bla:randje:v:51:y:2020:i:2:p:589-612
Journal Field
Industrial Organization
Author Count
1
Added to Database
2026-01-25