Optimal Incentives Under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data

Pierre Dubois and Tomislav Vukina

No 24645, 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark from European Association of Agricultural Economists

Abstract: In this paper we develop an analytical framework for the estimation of the structural model parameters of an incentive contract under moral hazard with heterogeneous agents. Using micro level data on swine production contract settlements, we confirm that contract farmers are heterogenous with respect to their risk aversion and that this heterogeneity affects the principal's allocation of production inputs across farmers. Assuming that contracts are optimal, we obtain estimates of a lower and an upper bound of agents' reservation utilities. We show that farmers with higher risk aversion have lower outside opportunities and hence lower reservation utilities.

Keywords: Livestock Production/Industries; Production Economics (search for similar items in EconPapers)
Pages: 16
Date: 2005
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Optimal incentives under moral hazard and heterogeneous agents: Evidence from production contracts data (2009)
Working Paper: Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data (2008)
Working Paper: Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data (2006)
Working Paper: Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data (2006)
Working Paper: Optimal incentives under moral hazard and heterogeneous agents: evidence from production contracts data (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae05:24645

DOI: 10.22004/ag.econ.24645

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