The purpose of the paper is to investigate contract renegotiation in multi-agent situations where risk averse agents negotiate a contract offer to the principal after they observed a common, unverifiable perfect signal about their actions. Renegotiation gives the agents gains from mutual...

This paper investigates optimal contracts to solve the moral hazard problem with subjective evaluations in the static environment in which the principal privately observes agents’ performances. Despite the limitations of feasible contracts that the principal can credibly offer, we show the...