Existing literature on property rights stresses the effect that distortions in future investment decisions have on establishing the optimal property rights. This paper demonstrates that property rights may also be affected by contracts, which exist prior to the establishment of property rights....

We consider an optimal contract between an entrepreneur and an investor, where the entrepreneur is subject to a double moral hazard problem (one being the choice of production effort and the other being earnings manipulation). Since the entrepreneur cannot entirely capture the results of his...

We consider a principal-agent relationship, where the agent is subject to a double moral hazardproblem (the choice of production effort and earnings manipulation). Since the agent cannot completely capture the results of his effort, the production effort is socially inefficient. The opportunity...