acting as agents under contract and taking costly actions to acquire information before taking decisions. Limited liability … an additional reason to those in the classic principal-agent literature for using contracts with pay increasing in the …

requires the use of an appropriate incentive contract so as to realign his interests with those of the principal. The parties … of the optimal flexible contract both when the parties have sharp probabilistic beliefs over the possible events in which … risk aversion, the higher the agency costs for delegation and hence the less profitable is a flexible contract versus a …

that hardly explains the many features of an insurance contract. We extend this setup to include the situation that the … costlessly observable, then it should be included in the contract to improve the risk sharing-incentive trade-off under moral … resulting incompleteness of the contract opens the door to controversies and disputes that may lead to judicial procedures. We …

underlying payoffs are identical. However, loss aversion also predicts that workers will demand higher wages to accept penalty … find evidence for the predicted distaste for penalty contracts. In four experiments penalty framing actually increased the … job offer acceptance rate relative to bonus framing. I rule out a number of explanations, most notably self …