EconPapers    
Economics at your fingertips  
 

Optimal share contracts with moral hazard on effort and in output reporting: managing the double Laffer curve effect

Alain de Janvry () and Elisabeth Sadoulet ()

Oxford Economic Papers, 2007, vol. 59, issue 2, 253-274

Abstract: We explore in this paper the design of optimal share contracts when there is a double moral hazard, one on inputs exclusively provided by the agent (such as effort) and the other in reporting the level of output to be shared with the principal, and when there is a social efficiency cost to under-reporting. The optimal contract is second best in that it allows for residual moral hazard in both effort and output reporting. The model predicts that contract terms will vary with the value to the tenant of unreported output as well as with any capacity of the principal to directly supervise the agent. The model is written for a landlord-tenant share contract but applies as well for tax collection and franchising. Copyright 2007 , Oxford University Press.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpl034 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:59:y:2007:i:2:p:253-274

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by A. Banerjee and James Forder

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press (). This e-mail address is bad, please contact .

 
Page updated 2019-10-13
Handle: RePEc:oup:oxecpp:v:59:y:2007:i:2:p:253-274