On the validity of the first-order approach with moral hazard and hidden assets

With moral hazard and anonymous asset trade, first-order conditions need not characterize effort and portfolio choices. The standard procedure for establishing validity of the first-order approach in economies with one hidden asset is not fruitful when multiple assets are hidden.

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Year of publication:	2014
Authors:	Bertola, Giuseppe ; Koeniger, Winfried
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 124.2014, 3, p. 402-405
Publisher:	Elsevier
Subject:	Hidden action \| Hidden assets \| Principal agent \| First-order approach

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Type of publication:	Article
Classification:	E21 - Consumption; Saving ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; D82 - Asymmetric and Private Information
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010930735