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Author: | Feess, E. Ossig, S. Walzl, M. |
Title: | The impact of truth-telling and limited wealth in a principal-agent model |
Journal: | Schmalenbach Business Review
2005 : JAN, VOL. 57:1, p. 29-45 |
Index terms: | Moral hazard Liability Theories Models |
Language: | eng |
Abstract: | This study derives the optimal contract in a model in which the agent's effort is unobservable and his findings are private information. The focus of this study is on the impact of the agent's wealth constraint. It is shown among others that three regions need to be distinguished: if the agent's wealth is above a critical threshold, then the principal implements a first-best effort without rent. |
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