Contracting with altruistic agents under moral hazard

Cécile AUBERT ()

No 200, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: In principal-agent settings with moral hazard, the fact that agents are altruistic vis-a-vis third parties (e.g. their family) modifies incentive costs. We derive sufficient conditions for the principal to benefit from altruism. They bear on how altruism affects the agent's marginal rate of substitution between monetary transfers and effort. We characterize the contracts allowing to screen agents with different degrees of altruism for additive separable utilities. When two agents who are altruistic with respect to each other participate in a contractual relationship with two different principals, the outcomes in the two hierarchies become linked as in a common agency game. With public information on contracts and outcomes, and sequential contracting, the first principal cannot induce effort in equilibrium

Keywords: Incentives; Altruism; Moral Hazard; Insurance (search for similar items in EconPapers)
JEL-codes: D82 D10 (search for similar items in EconPapers)
Date: 2004-08-11

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Persistent link: http://EconPapers.repec.org/RePEc:ecm:nasm04:200

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