| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5072280 | Games and Economic Behavior | 2013 | 28 Pages |
Abstract
⺠We provide a new explanation for the dominance of the low-powered incentive contract over the high-powered one. ⺠We show that unobservable risk aversion or cost leads to low-powered incentives. ⺠We then consider the case that both risk aversion and cost of the agent are unobservable to the principal. ⺠It is shown that the principal is inclined to provide a low-powered incentive contract under certain conditions.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Dawen Meng, Guoqiang Tian,