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For workers facing uncertain output, fixed-wage contracts provide implicit insurance compared to self-employment or performance-based pay. But like any insurance product, these contracts are prone to market distortions through moral hazard and adverse selection. Using a model of wage contracts...
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. Theoretical results indicate that the specification contract under the principal-agent framework is of limited utility due to …
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productive downstream agent, hires an intermediary to forward a sub-contract with specified output targets and payments. The … liability and paid a bonus. I characterize the optimal grand-contract with a continuum of agent types by using optimal control …
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