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Creating countervailing incentives through the choice of instruments

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  • Bontems, Philippe
  • Bourgeon, Jean-Marc

Abstract

Cet article analyse l'efficacité relative de contrats basés soit sur la production soit sur l'effort dans un modèle d'agence avec antisélection. Selon le taux marginal de substitution entre effort et productivité, deux cas apparaissent. Dans le premier, les deux contrats impliquent un même ordre des agents selon leur productivité. Dans ce cas, un des instruments domine toujours l'autre quel que soit le type de l'agent. Dans le second cas, les deux contrats produisent des ordres inverses pour le type de l'agent, et le principal préfère toujours employer une stratégie mixte dépendante du paramètre de productivité sur l'ensemble des deux contrats. S'il n'existe pas de restriction sur les stratégies mixtes, le principal peut atteindre le premier rang dans ce cadre d'antisélection. Si le principal est contraint à utiliser des stratégies pures, il préfère néanmoins offrir un contrat où la nature de la variable de contrôle dépend de la productivité de l'agent. En d'autres termes, offrir un ensemble de contrats où l'agent peut choisir l'instrument de contrôle permet d'améliorer le bien-être du principal.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 76 (2000)
Issue (Month): 2 (May)
Pages: 181-202

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Handle: RePEc:eee:pubeco:v:76:y:2000:i:2:p:181-202

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Web page: http://www.elsevier.com/locate/inca/505578

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References

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  1. Claude Crampes, 1986. "Des instruments pour le contrôle des entreprises publiques," Revue Économique, Programme National Persée, vol. 37(5), pages 757-782.
  2. Khalil Fahad & Lawarree Jacques, 1995. "Input versus Output Monitoring: Who Is the Residual Claimant?," Journal of Economic Theory, Elsevier, vol. 66(1), pages 139-157, June.
  3. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
  4. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
  5. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
  6. Eric Maskin & John G. Riley, 1984. "Input Versus Output Incentive Schemes," UCLA Economics Working Papers 354, UCLA Department of Economics.
  7. Maggi G. & Rodriguez-Clare A., 1995. "On Countervailing Incentives," Journal of Economic Theory, Elsevier, vol. 66(1), pages 238-263, June.
  8. Tracy R. Lewis, 1996. "Protecting the Environment When Costs and Benefits Are Privately Known," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 819-847, Winter.
  9. Besanko, David, 1987. "Performance versus design standards in the regulation of pollution," Journal of Public Economics, Elsevier, vol. 34(1), pages 19-44, October.
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Citations

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Cited by:
  1. Panico, Claudio, 2012. "Control and contract design in research collaborations: A complete contract perspective," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 459-470.
  2. Crepin, Anne-Sophie & Jayet, Pierre-Alain, 2002. "Set-Aside versus Quotas in Contracts for Agro-Environmental Regulation," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24950, European Association of Agricultural Economists.
  3. Fahad Khalil & Martin Chalkley, 2005. "Third Party Purchasing of Health Services: Patient Choice and Agency," Working Papers UWEC-2003-35-P, University of Washington, Department of Economics.
  4. Marcello D'Amato & Riccardo Martina & Salvatore Piccolo, 2005. "Competitive Pressure, Incentives and Managerial Rewards," CSEF Working Papers 148, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Jul 2006.
  5. Khalil, Fahad & Lawarree, Jacques, 2001. "Catching the agent on the wrong foot: ex post choice of monitoring," Journal of Public Economics, Elsevier, vol. 82(3), pages 327-347, December.
  6. Fahad Khalil & Jacques Lawarree, 2000. "CATCHING THE AGENT ON THE WRONG FOOT: ex post choice of monitoring," Discussion Papers in Economics at the University of Washington 0006, Department of Economics at the University of Washington.
  7. Kuhn, Michael & Siciliani, Luigi, 2007. "Performance Indicators for Quality with Adverse Selection, Gaming and Inequality Aversion," CEPR Discussion Papers 6261, C.E.P.R. Discussion Papers.

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