Reservation wage and optimal contract for experts

Jooyong Jun and Kyoung-Soo Yoon

Economics Letters, 2012, vol. 117, issue 3, 619-623

Abstract: We examine the optimal contract for experts with type-dependent reservation wage. We show that Bhattacharya and Pfleiderer (1985)’s result, the possibility of achieving the truthful revelation of information with full surplus extraction, can be achieved with relaxing the restriction on the shape of reservation wage schedules. This outcome can be achieved through payoff functions that are affine in a convex transformation of the ex-post error. Our result is applied to the case of multiple experts.

Keywords: Contract; Type-dependence; Reservation wage (search for similar items in EconPapers)
JEL-codes: D82 D86 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:117:y:2012:i:3:p:619-623

DOI: 10.1016/j.econlet.2012.08.003

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