 Self-enforcing contracts in agricultureEuropean Review of Agricultural Economics, 2006, vol. 33, issue 1, 73-92 Abstract: This article examines a self-enforcing contract between a risk-neutral principal and a risk-averse agent who is able to hold up values ex post. It shows that risk aversion and variance can only partly explain the contract's incentive intensity. Ex post bargaining power and outside options will also determine contract choice. If the agent's ex post bargaining position is weak, the principal cannot commit to high-powered incentives, whereas if the agent's ex post bargaining position is good, the agent cannot commit to low-powered incentives. The model may thus explain some puzzles in agricultural contracts, in particular why risk-averse agents sometimes accept to be governed by high-powered incentive contracts that are quite similar to fixed rental contracts, and why risk-neutral agents are sometimes offered share contracts with lower-powered incentives. Copyright 2006, Oxford University Press. Date: 2006 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:erevae:v:33:y:2006:i:1:p:73-92 Ordering information: This journal article can be ordered from Access Statistics for this article European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo More articles in European Review of Agricultural Economics from Oxford University Press and the European Agricultural and Applied Economics Publications Foundation Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC. |
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