I thank two anonymous referees as well as Patrick Schmitz for helpful comments.
MORAL HAZARD, RISK AVERSION, AND EFFICIENCY
Article first published online: 15 JAN 2014
© 2014 Board of Trustees of the Bulletin of Economic Research and John Wiley & Sons Ltd
Bulletin of Economic Research
How to Cite
Gürtler, O. (2014), MORAL HAZARD, RISK AVERSION, AND EFFICIENCY. Bulletin of Economic Research. doi: 10.1111/boer.12021
- Article first published online: 15 JAN 2014
- moral hazard;
- risk aversion;
This note revisits the classic moral-hazard model, but assumes that the output distribution has moving support and punishments are limited. The results show that the principal can implement an efficient solution if the agent is sufficiently risk averse.