Optimal Labor Contracts with Asymmetric Information and More than Two Types of Agent

Daniela Elena Marinescu and Dumitru Marin
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Daniela Elena Marinescu: Bucharest Academy of Economic Studies
Dumitru Marin: Bucharest Academy of Economic Studies

Theoretical and Applied Economics, 2012, vol. XVIII(2012), issue 5(570), 5-18

Abstract: In the paper we discuss the optimal labor agreements between workers and firms in the situation of asymmetric information. Using a standard adverse selection model, we analyze the optimality of the labor contracts when it is the firm which has private information affecting the results of the contractual relationship. We propose an alternative procedure to solve the optimization problem, using the informational rents as variables. In the last part of the paper we derive and comment the features of the optimal labor contracts in asymmetric information.

Keywords: optimal labor contract; incentives; adverse selection. (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:5(570):y:2012:i:5(570):p:5-18

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