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This paper presents a market equilibrium model of CEO assignment, pay and incentives under risk aversion and … distorted by the agency problem as firms involving higher risk or disutility choose less talented CEOs. Such firms also pay … higher salaries in the cross-section, but economy-wide increases in risk or the disutility of being a CEO (e.g. due to …
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This paper presents a market equilibrium model of CEO assignment, pay and incentives under risk aversion and … distorted by the agency problem as firms involving higher risk or disutility choose less talented CEOs. Such firms also pay … higher salaries in the cross-section, but economy-wide increases in risk or the disutility of being a CEO (e.g. due to …
Persistent link: https://www.econbiz.de/10012462666
In a principal-agent model with adverse selection and moral hazard the impact of the agent's transferable human capital on incentives is analysed. It is shown that under asymmetric information the employer (principal) prefers a worker (agent) with general skills to a similarly productive worker...
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We study the Lemons Problem when workers have private information on both their skills and their intrinsic motivation for the job offered by firms in the labor market. We first show that, when workers are motivated, inefficiencies due to adverse selection are mitigated. More interestingly,...
Persistent link: https://www.econbiz.de/10011730993
Inefficient job assignments are usually explained with incomplete information about employees' abilities or contractual imperfections. We show that inefficient assignments arise even with full information about employees' types and complete contracts. Our further results provide a new...
Persistent link: https://www.econbiz.de/10013123052