Optimal Contracts for Risk Managers

This study analyzed the principal-agent problem, in which the agent performs risk management tasks, and considered the cost minimization problem of the principal, the objective of which is to design the cheapest contract inducing a target effort. Our results confirm that a one-step bonus contract should be used, which means that a bonus contract is most efficient for the principal in terms of incentive provision. A new condition to justify the first-order approach in our model was also provided

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Year of publication:	2018
Authors:	Jung, Jin Yong
Publisher:	[2018]: [S.l.] : SSRN
Subject:	Risikomanagement \| Risk management \| Vertragstheorie \| Contract theory \| Prinzipal-Agent-Theorie \| Agency theory \| Vertrag \| Contract \| Leistungsanreiz \| Performance incentive \| Risiko \| Risk