On the existence of share contracts under limited liability

Kaniṣka Dam and Daniel Ruiz Pérez

Economics Letters, 2012, vol. 117, issue 3, 552-555

Abstract: In a principal-agent relationship under limited liability, the agent in general receives the full share of revenue. We show that when the agent exerts effort in multiple tasks, the effort substitution effect helps explain the existence of share contracts even under limited liability.

Keywords: Multitasking; Effort substitution; Share contracts (search for similar items in EconPapers)
JEL-codes: D23 D82 G32 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:117:y:2012:i:3:p:552-555

DOI: 10.1016/j.econlet.2012.07.035

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