Describability and Agency Problems
Abstract
This paper suggests a reason, other than asymmetric information, why agency contracts are not explicitly contingent on the agent's performance or actions. Two ingredients are essential to this reason. The first is the written form that contracts are required to take to be enforceable. The second is a form of discontinuity in the parties' preferences and in the technology that transforms actions into a (probabilistic) outcome. We show that under these conditions the chosen contract may not be explicitly contigent on the agent's action although, in principle, such actions are contractible and observable to all parties to the contract, court included.Download Info
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Paper provided by EconWPA in its series Game Theory and Information with number 9511001.Length: 32 pages
Date of creation: 15 Nov 1995
Date of revision: 20 Sep 1996
Handle: RePEc:wpa:wuwpga:9511001
Note: Type of Document - LaTeX; prepared on IBM PC ; to print on PostScript 600DPI; pages: 32; figures: included
Contact details of provider:
Web page: http://128.118.178.162
Related research
Keywords: Acency Problems; Written Contracts; Incomplete Contracts; Hard-to-describe Actions and Outcomes;Other versions of this item:
- Anderlini, Luca & Felli, Leonardo, 1998. "Describability and agency problems," European Economic Review, Elsevier, vol. 42(1), pages 35-59, January.
- C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
References
References listed on IDEASPlease report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oliver Hart & John Moore, 1985.
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- David A. Miller & Kareen Rozen, 2011. "Optimally Empty Promises and Endogenous Supervision," Levine's Working Paper Archive 786969000000000270, David K. Levine.
- Al-Najjar, Nabil I. & Anderlini, Luca & Felli, Leonardo, 2002.
"Unforeseen Contingencies,"
CEPR Discussion Papers
3271, C.E.P.R. Discussion Papers.
- Nabil J Al-Najjar & Luca Anderlini & Leonardo Felli, 2002. "Unforeseen Contingencies," STICERD - Theoretical Economics Paper Series 431, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- David A. Miller & Kareen Rozen, 2011. "We study optimal contracting in team settings, featuring stylized aspects of production environments with complex tasks. Agents have many opportunities to shirk, task-level monitoring is needed to pro," Cowles Foundation Discussion Papers 1823, Cowles Foundation for Research in Economics, Yale University, revised Jun 2012.
- Anderlini, Luca & Felli, Leonardo, 2004.
"Bounded rationality and incomplete contracts,"
Research in Economics,
Elsevier, vol. 58(1), pages 3-30, March.
- Luca Anderlini & Leonardo Felli, 2000. "Bounded Rationality and Incomplete Contracts," STICERD - Theoretical Economics Paper Series 407, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Shurojit Chatterji & Dragan Filipovich, 2004. "Ambiguous Contracting: Natural Language and Judicial Interpretation," Econometric Society 2004 North American Winter Meetings 419, Econometric Society.
- Fares, M’hand, 2005. "Quels fondements à l’incomplétude des contrats?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(3), pages 535-555, Septembre.
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