Private Contracts and Efficiency: An Example
AbstractWe 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.
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Bibliographic InfoPaper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 596.
Length: 5 pages
Date of creation: Aug 2004
Date of revision:
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Postal: Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501
Web page: http://www.kier.kyoto-u.ac.jp/eng/index.html
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Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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