EconPapers    
Economics at your fingertips  
 

Renegotiation and Optimality in Agency Contracts

Ching-to Ma ()

Review of Economic Studies, 1994, vol. 61, issue 1, 109-129

Abstract: We analyse renegotiation in a hidden action principal-agent model. Contract renegotiation offers are made by the agent. A refinement is imposed on the principal's beliefs: if precisely one action is optimal with respect to both the principal's and the agent's contracts, the principal believes that that action has been taken. With the refinement imposed, perfect-Bayesian equilibrium allocations are identical to the second best in the classical principal-agent model without renegotiation. When renegotiation is led by the agent and when equilibria satisfy the refinement, equilibrium allocations are ex ante efficient.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (32) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.2307/2297879 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Renegotiation and Optimality in Agency Contracts (1991)
Working Paper: Renegotiation and Optimality in Agency Contracts (1990)
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:restud:v:61:y:1994:i:1:p:109-129.

Access Statistics for this article

Review of Economic Studies is currently edited by Andrea Prat, Bruno Biais, Kjetil Storesletten and Enrique Sentana

More articles in Review of Economic Studies from Oxford University Press
Bibliographic data for series maintained by Oxford University Press (). This e-mail address is bad, please contact .

 
Page updated 2019-10-04
Handle: RePEc:oup:restud:v:61:y:1994:i:1:p:109-129.