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contractible. If the firm can make a take-it-or leave-it offer, the optimal contract is also state-dependent but always suboptimal … leading to agency costs due inequity aversion. If the parties bargain over the optimal contract, the optimal division of … surplus is more equitable compared to the case with a purely selfish worker. Moreover, the optimal contract with bargaining …
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In the analysis of normal form games that model strategic interactions between individuals, the Nash equilibrium is a significant contribution. However, this concept has some limits: often, it proposes a collective result undesirable by all and in some cases, this equilibrium is not realizable....
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partnering contracts and shows that economic theory can explain the legal clauses in the partnering contract, and the partnering … contract can solve inefficiency in the Nash equilibrium in the Prisoners’ Dilemma game. The partnering contract makes it …
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