Moral Hazard and Target Budgets

Material type: 文書・図像類

Author: イシグロ, シンゴほか

Publisher: Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University

Publication date: 2018-02

Material Format: Paper

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Note (General)：: In this paper we investigate a wide class of principal–agent problems with moral hazard and target budgets. The latter requires that the principal fix...

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Paper

Material Type: 文書・図像類
Title: Moral Hazard and Target Budgets
Author/Editor: イシグロ, シンゴ
ヤスダ, ヨウスケ
Author Heading: イシグロ, シンゴ
https://nrid.nii.ac.jp/nrid/1000060288496
ヤスダ, ヨウスケ
https://nrid.nii.ac.jp/nrid/1000070463966
Publication, Distribution, etc.: Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University
Publication Date: 2018-02
Publication Date (W3CDTF): 2018-02
Periodical title: Discussion Papers In Economics And Business
No. or year of volume/issue: 18-03
Volume: 18-03
Pages: 1-65
Text Language Code: eng
Subject Heading: Moral Hazard
Multiple Agents
Subjective Evaluation
Target Budgets
Target Audience: 一般
Note (General): In this paper we investigate a wide class of principal–agent problems with moral hazard and target budgets. The latter requires that the principal fixes a total budget for the wages paid to agents regardless of their outputs realized ex post. Target budgets are relevant not just because they are exogenous institutional constraints in some cases, but they can also endogenously arise in other cases, especially when agents’ performances are not verifiable and thus the principal needs subjective evaluations. Although target budgets impose an additional constraint, we show the irrelevance theorem that the principal is never worse off using target budgets when there are at least two risk-neutral agents. Even when all agents are risk averse, we also show that the similar irrelevance result asymptotically holds if the number of agents is sufficiently large. Furthermore, we characterize optimal contracts when the target budget becomes a tight constraint so that the irrelevance result cannot be applied.
References (URI): http://www2.econ.osaka-u.ac.jp/library/global/dp/1803.pdf
URI
http://www2.econ.osaka-u.ac.jp/library/global/dp/1803.pdf
Data Provider (Database): 国立情報学研究所 : 学術機関リポジトリデータベース（IRDB）（機関リポジトリ）
https://irdb.nii.ac.jp
Original Data Provider (Database): 大阪大学 : 大阪大学学術情報庫　桜華