We derive the optimal contract in a model in which the agent's effort is unobservable and his findings are private information. Our focus is on the impact of the agent's wealth constraint. We show that three regions need to be distinguished: if the agent's wealth is above a critical threshold,...

We analyze the impact of liability risks for malpractice on the optimal reimbursement schemes for hospitals. In our model, the hospital decides upon two unobservable efforts, a cost reduction effort and a quality improvement effort. We assume that the total effort is positive even without...

We derive the optimal contract in a model in which the agent's effort is unobservable and his findings are private information. Our focus is on the impact of the agent's wealth constraint. We show that three regions need to be distinguished: if the agent's wealth is above a critical threshold,...