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Limited liability and the risk-incentive relationship

Budde, Jörg; Kräkel, Matthias - 2008

Several empirical findings have challenged the traditional view on the trade-off between risk and incentives. By combining risk aversion and limited liability in a standard principal-agent model the empirical puzzle on the positive relationship between risk and incentives can be explained....

Persistent link: https://www.econbiz.de/10010383018

Team Design under Moral Hazard

Starmans, Jan - 2020

This paper studies team design in the context of a standard risk-neutral principal-agent model with contractual …' technologies in a team in the absence of complementarities in the production technology. I characterize optimal team design and … principal may be biased to hire an inefficiently small team. The results have implications for the heterogeneity of agents in …

Persistent link: https://www.econbiz.de/10012832543

The Constant Relationship between Risk and Incentive in Optimal Incentive Contracts

Nanba, Toshihiko - 2019

It is s important for firms to choose appropriate performance measurements when they evaluate their employees' performance. In this paper, we examine the relationship between uncertainty and incentives in which the risk-averse agent has the specific knowledge. We show that uncertainty does not...

Persistent link: https://www.econbiz.de/10012862275

Standards and incentives under moral hazard with limited liability

Reinshagen, Felix - 2012

We consider a model of moral hazard with limited liability of the agent and effort that is two-dimensional. One dimension of the agent's effort is observable and the other is not. The principal can thusmake the contract conditional not only on outcome but also on observable effort. The...

Persistent link: https://www.econbiz.de/10009490184

Merger performance and managerial incentives

Kräkel, Matthias; Müller, Daniel - 2014

We consider a two-stage principal-agent model with limited liability in which a CEO is employed as agent to gather information about suitable merger targets and to manage the merged corporation in case of an acquisition. Our results show that the CEO systematically recommends targets with low...

Persistent link: https://www.econbiz.de/10011430291

Merger efficiency and managerial incentives

Kräkel, Matthias; Müller, Daniel - 2013

Persistent link: https://www.econbiz.de/10010198514

Overwhelmed by routine tasks : a multi-tasking principal agent perspective

Demougin, Dominique; Helm, Carsten - 2022

We analyze a multitasking model with a verifiable routine task and a skill-dependent activity characterized by moral hazard. Contracts negotiated by firm/employee pairs follow from Nash bargaining. High- and low-skilled employees specialize, intermediate productivity employees perform both...

Persistent link: https://www.econbiz.de/10013201713

Wage floors, imperfect performance measures, and optimal job design : conference paper

Kragl, Jenny; Schöttner, Anja - 2013

We analyze the effects of wage floors on optimal job design in a moral-hazard model with asymmetric tasks and imperfect aggregate performance measurement. Due to cost advantages of specialization, assigning the tasks to different agents is efficient. A sufficiently high wage floor, however,...

Persistent link: https://www.econbiz.de/10010339385

Information Acquisition and the Equilibrium Incentive Problem

Su, Alice Peng-Ju - 2017

I study the optimal incentive provision in a principal–agent relationship with costly information acquisition by the agent. I emphasize that adverse selection or moral hazard is the principal's endogenous choice by inducing or deterring information acquisition. The principal designs the...

Persistent link: https://www.econbiz.de/10012960416

Optimal Delegated Search with Adverse Selection and Moral Hazard

Ulbricht, Robert - 2014

The paper studies a model of delegated search. The distribution of search revenues is unknown to the principal and has to be elicited from the agent in order to design the optimal search policy. At the same time, the search process is unobservable, requiring search to be self-enforcing. The two...

Persistent link: https://www.econbiz.de/10013057288

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