I analyze a model in which a principal offers a contract to an agent and can influence the agent's marginal return of …

each other. The contract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal …

motivations as a source of incentives. We solve for the optimal contract in the basic principal-agent problem and show that …

risk aversion, the higher the agency costs for delegation and hence the less profitable is a flexible contract versus a … rigid, non discretionary contracts. Delegation grants some flexibility in the choice of the action by the agent, but also … requires the use of an appropriate incentive contract so as to realign his interests with those of the principal. The parties …

Using an agency model, we show how delegation, by generating additional private information, improves dynamic … effect which reduces an inefficient agent's take-the-money-and-run incentive. Although delegation entails a loss of control …, it is optimal when uncertainty about operational efficiency is large. Moreover, delegation is more effective with …

This paper analyses bargaining over an incentive compatible contract in a moral hazard framework. We introduce the … bargaining power, the contract in the Kalai-Smorodinsky solution yields a more efficient outcome and induces more effort. The …