Repeated moral hazard with effort persistence
I study a problem of repeated moral hazard where the effect of effort is persistent over time: each period's outcome distribution is a function of a geometrically distributed lag of past efforts. I show that when the utility of the agent is linear in effort, a simple rearrangement of terms in his lifetime utility translates this problem into a related standard repeated moral hazard. The solutions for consumption in the two problems are observationally equivalent, implying that the main properties of the optimal contract remain unchanged with persistence. For illustration, I present the computed solution of an example.
Year of publication: |
2010
|
---|---|
Authors: | Jarque, Arantxa |
Published in: |
Journal of Economic Theory. - Elsevier, ISSN 0022-0531. - Vol. 145.2010, 6, p. 2412-2423
|
Publisher: |
Elsevier |
Subject: | Moral hazard Repeated agency Persistence |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Repeated moral hazard with effort persistence
Jarque, Arantxa, (2008)
-
Jarque, Arantxa, (2010)
-
Unobservable persistant productivity and long term contracts
Hopenhayn, Hugo Andrés, (2009)
- More ...