Armstrong, Mark (contributor); Vickers, John (contributor) - 2007
> 0. In these cases (14) is equal to zero,
which in turn implies that
γ < α ,
and the trade-off between u and v in the … rule (13) is less steep than the principal’s
true trade-off α.
Given U, the two parameters V and γ in (13) are determined … final equality follows from (23) and integration by parts. Therefore, γ < α and
the trade-off between u and v in the rule …