One of the standard predictions of the agency theory is that more incentives can be given to agents with lower risk … obtain that lower agent’s risk aversion unambiguously leads to higher incentives when the technology function linking …

that show, in a very general setting, that the choice between work effort and leisure under given linear incentives depends …

and provides a new rationale for using performance-sensitive debt. I also characterize the agent's incentives when the … termination can induce shirking rather than incentivize effort. The strength of incentives is hump-shaped and agents close to …

, increasing the number of different wages reduces the agent's expected utility without providing strong additional incentives …

ambiguous and he is averse towards ambiguity. We show that the principal may optimally provide no incentives or contract only on …

, increasing the number of different wages reduces the agent's expected utility without providing strong additional incentives …

under-compensation region. Ambiguity also causes a disconnect between the current effort cost and the strength of incentives …. That is, even when the agent is under-compensated, his incentives are as strong as in the over-compensation region, since … the worst-case. analyze the agent's incentives for this case, and show that the possibility of firing is detrimental to …

ambiguous and he is averse towards ambiguity. We show that the principal may optimally provide no incentives or contract only on …