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A simple impossibility result in behavioral contract theory

Giovanni Immordino (), Anna Maria Menichini () and Maria Romano

Economics Letters, 2011, vol. 113, issue 3, 307-309

Abstract: This paper studies a contract between an optimistic agent and a realistic principal, both risk-neutral. Even with complete contracts and ex-ante symmetric information, it may be impossible to achieve the first-best unless the weight on emotions is sufficiently low.

Keywords: Hidden action; Anticipatory utility; Impossibility (search for similar items in EconPapers)
JEL-codes: D86 (search for similar items in EconPapers)
Date: 2011
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Working Paper: A Simple Impossibility Result in Behavioral Contract Theory (2010) Downloads
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DOI: 10.1016/j.econlet.2011.08.027

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