Moral Hazard Contracts: Does One Size Fit All?
Incentive 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.
|Date of creation:||Nov 2006|
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|Publication status:||published in: Economics Letters , 2008, 100 (3), 399-401.|
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