Grochulski, Borys; Zhang, Yuzhe - In: Theoretical economics : TE ; an open access journal in … 18 (2023) 1, pp. 381-419
In this paper, we study the conditions under which termination is a useful incentive device in the canonical dynamic principal-agent moral hazard model of Sannikov (2008). We find that temporary suspension of the agent after poor performance dominates termination if the principal's outside...
