Moral Hazard Contracts: Does One Size Fit All?
AbstractIncentive theory predicts that contract terms should respond to differences in agents’ productivities. Firms’ practice of anonymous contracts thus appears puzzling. We show that such a “one-size-fits-all” approach can be reconciled with standard agency theory if careers are marked by frequent transitions between employers, and agents have career concerns because complete long-term contracts are not feasible.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2463.
Length: 9 pages
Date of creation: Nov 2006
Date of revision:
Publication status: published in: Economics Letters , 2008, 100 (3), 399-401.
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Other versions of this item:
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-09 (All new papers)
- NEP-BEC-2006-12-09 (Business Economics)
- NEP-CFN-2006-12-09 (Corporate Finance)
- NEP-MIC-2006-12-09 (Microeconomics)
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