performing agent must beat the second best to receive the winner prize. We analyze a tournament with two risk averse agents …. Under unlimited liability, the principal strictly benefits from a gap by partially insuring the agents and thereby reducing … labor costs. If the agents are protected by limited liability, the principal sticks to the standard tournament. …

and physicians, we examine the effect of task characteristics and the legal liability environment on the extent of risk …To address agents' moral hazard over effort, incentive contracts impose risk on the agents. As performance measures … (agents bear more risk) in more uncertain environments. This paper provides new evidence on the association between the extent …

A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in … environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature … use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and …