Limited Liability and the Trade-off between Risk and Incentives

Several empirical findings have challenged the traditional trade-off between risk and incentives. By combining risk aversion and limited liability in a standard principal-agent model the empirical puzzle on the positive relationship between risk and incentives can be explained.

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Year of publication:	2007
Authors:	Kräkel, Matthias
Publisher:	München : Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
Subject:	limited liability \| piece rates \| risk aversion \| risk-incentives trade-off

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Series:	SFB/TR 15 Discussion Paper ; 201
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	10.5282/ubm/epub.13351 [DOI] 791454274 [GVK] hdl:10419/93878 [Handle] RePEc:trf:wpaper:201 [RePEc]
Classification:	D01 - Microeconomic Behavior: Underlying Principles ; D82 - Asymmetric and Private Information ; J3 - Wages, Compensation, and Labor Costs ; M5 - Personnel Economics
Source:	EconStor

Persistent link: https://www.econbiz.de/10010333855