Hilken, K.; Jaegher, K.J.M. De; Jegers, M. - School of Economics, Universiteit Utrecht - 2013
We provide a hidden-action principal-agent model where the agent has referencedependent preferences. The loss-averse agent considers the base wage as reference point, and bonuses and/or penalties as gains and losses, respectively. When choosing optimal payments, the principal strategically sets...