We provide sufficient conditions for the first-order approach in the principal-agent problem when the agent’s utility has the nonseparable form u(y−c(a)) where y is the contractual payoff and c(a) is the money cost of effort. We first consider a decision-maker facing prospects which cost...

We use a principal-agent framework to reexamine the implications of the negligence and strict liability rules when the tortfeasor is an agency. (...)