Repeated moral hazard with effort persistence

Arantxa Jarque ()

No 08-04, Working Paper from Federal Reserve Bank of Richmond

Abstract: I study a problem of repeated moral hazard in which the effect of effort is persistent over time: each period's outcome distribution is a function of a geometrically distributed lag of past efforts. I show that when the utility of the agent is linear in effort, a simple rearrangement of terms in his lifetime utility translates this problem into a related standard repeated moral hazard. The solutions for consumption in the two problems are observationally equivalent, implying that the main properties of the optimal contract remain unchanged with persistence. To illustrate, I present the computed solution of an example. ; See also: WP 07-07

Keywords: Microeconomics; Economics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cta and nep-hpe
Date: 2008
View list of references View citations in EconPapers

Downloads: (external link)
http://www.richmondfed.org/publications/research/working_papers/2008/wp_08-4.cfm (text/html)
http://www.richmondfed.org/publications/research/w ... /2008/pdf/wp08-4.pdf (application/pdf)

Related works:
Working Paper: Repeated Moral Hazard with Effort Persistence (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fip:fedrwp:08-04

Ordering information: This working paper can be ordered from
http://www.richmondfed.org/publications/

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Richmond
Contact information at EDIRC.
Series data maintained by Diane Rosenberger ().