Preference representation and randomization in principal-agent contracts

Conditions on an agent's preferences that induce a demand for ex ante randomization are derived. When the agent has constant absolute risk aversion in wealth but additive-separable preferences in wealth and effort, optimal contracts often require randomization. Under additive separability, the...

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Veröffentlicht in:	Economics letters 1993, Vol.42 (1), p.25-30
Hauptverfasser:	Arya, Anil, Young, Richard A., Fellingham, John C.
Format:	Artikel
Sprache:	eng
Online-Zugang:	Volltext
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