We develop a few numerical models to examine the moral hazard problems exemplified by Itoh (2003, Ch. 4), following our earlier study (Hashimoto et al. (2011)) on the adverse selection problems. To this end, we first model a risk averse or risk neutral entrepreneur who selects his action among...

By building and solving numerical models of the parts supply problems (an example of the adverse selection problems), and analyzing various issues of the contract theory, we demonstrate the benefits of the numerical approach. First, this approach facilitates the understanding of the contract...

This is a study to develop and solve numerical models based on Itoh’s (2003, Ch. 1) “Parts Supply Problems” for better understanding the contract theory. In the first part of this paper, by following Itoh (2003) we investigate 2- and 3-agent type cases; in the succeeding part, by using...