Distributions for the first-order approach to principal-agent problems
The first-order approach is a technical shortcut widely used in agency problems. The best known set of sufficient conditions for its validity are due to Mirrlees and Rogerson and require that the distribution function is convex in effort and has a likelihood ratio increasing in output. Only one nontrivial example was so far known to satisfy both properties. This note provides two rich families of examples displaying both properties. Copyright Springer-Verlag Berlin Heidelberg 2003
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Volume (Year): 21 (2003)
Issue (Month): 1 (01)
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