Private Contracts and Efficiency: An Example

Harrison Cheng (hacheng@usc.edu) and Haruo Imai
Additional contact information
Harrison Cheng: Department of Economics, University of Southern Calfornia

No 596, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: We give an example to show that efficiency in the principal-agent organization depends on the public information nature of the wage contracts. When wage contracts are private, the principal may have a moral hazard problem in deviating from some of the contracts, and efficiency need not hold even when all players are risk-neutral.

JEL-codes: D23 D8 (search for similar items in EconPapers)
Pages: 5 pages
Date: 2004-08
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:kyo:wpaper:596

Access Statistics for this paper

More papers in KIER Working Papers from Kyoto University, Institute of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Makoto Watanabe (watanabe.makoto.2d@kyoto-u.ac.jp).