Ex ante contracting with inequity aversion

Kangsik Choi

Applied Economics, 2007, vol. 39, issue 9, 1139-1145

Abstract: We introduce that the principal and the agent can contract at the ex ante stage, and allow for risk-averse agents with inequity aversion to analyse the properties of the optimal incentive scheme under adverse selection. Contrary to the solutions of standard adverse selection problems, our main finding is that the efficient agent who is a risk-averse in presence of concerns with inequity produces more than first-best level, whereas the inefficient agent produces less than second-best level than canonical pure adverse selection output.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840500447914 (text/html)
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:taf:applec:v:39:y:2007:i:9:p:1139-1145

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840500447914

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().