Moral Hazard and Size Trade in Agency Contracts

The purpose of the paper is to investigate how side track (or collusion) among agents affects the principal's welfare in a hidden action model. We assume that the agent's actions are mutually observable but not contradictable among them and hence direct coordination of actions via side contracting is infeasable. The side contract is thus contingent only on verifiable performance signals, and its main role is mutual insurance.

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Year of publication:	1996
Authors:	Ishiguro, S. ; Itoh, H.
Institutions:	Institute of Social and Economic Research (ISER), Osaka University
Subject:	MORAL HAZARD \| RISK \| ASYMETRIC INFORMATION

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Series:	ISER Discussion Paper.
Type of publication:	Book / Working Paper
Notes:	27 pages
Classification:	D82 - Asymmetric and Private Information
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008603014