Private Contracts and Efficiency: An Example

We give an example to show that efficiency in the principal-agent organization depends on the public information nature of the wage contracts. When wage contracts are private, the principal may have a moral hazard problem in deviating from some of the contracts, and efficiency need not hold even when all players are risk-neutral.

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Year of publication:	2004-08
Authors:	Cheng, Harrison ; Imai, Haruo
Institutions:	Institute of Economic Research, Kyoto University

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Series:	KIER Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 596 5 pages
Classification:	D23 - Organizational Behavior; Transaction Costs; Property Rights ; D8 - Information and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005385292