What Can We Learn from Simulating a Standard Agency Model?

For typical parameterizations of the standard Holmstrom [Bell Journal of Economics 10 (1979) 74] agency model, this paper demonstrates that the set of first-order conditions characterizing the optimal contract can be reduced to a single equation. A problem of investment financing under moral hazard is used to illustrate the reduced-form equation's usefulness in quantitative applications. When the agent has CARA preferences over consumption, it is shown that any exogenous limit on the penalties for low output is always binding

MoreLess

Year of publication:	2002
Authors:	Robe, Michel A.
Publisher:	[S.l.] : SSRN
Subject:	Theorie \| Theory \| Prinzipal-Agent-Theorie \| Agency theory \| Moral Hazard \| Moral hazard \| Beschränkte Haftung \| Limited liability
Description of contents:	Abstract [papers.ssrn.com]

Extent:	1 Online-Ressource
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: Economics Letters, Vol. 73, No. 2, November 1, 2001 Volltext nicht verfügbar
Classification:	D82 - Asymmetric and Private Information ; C50 - Econometric Modeling. General ; C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; C63 - Computational Techniques
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10014124160