We examine the behavior of subjects in a simple principal-agent game with hidden action. While subjects in the role of agents tend to choose the actions which maximize their expected profits, subjects in the role of principals offer contracts which differ from the theoretical predictions. We...

In Keser and Willinger (IJIO, 2000) we found that many contracts offered by experimental subjects do not satisfy incentive compatibility. While the combination of incentive compatibility and a binding participation constraint would require that the agent incurs a net loss in the less favorable...

[fre] Les expériences qui ont testé les prédictions du modèle principal-agent, ont révélé que la plupart des contrats offerts ne respectaient pas la contrainte d'incitation, à la fois dans les situations où l'interaction entre un principal et un agent est répétée pendant plusieurs...

In a laboratory experiment, we investigate behavior in a principal–agent situation with moral hazard. We evaluate the predictive success of two theories. One is the standard agency theory, which assumes that the agent will accept any contract offer that satisfies his participation...