Edmans, Alex; Gabaix, Xavier - In: Review of Financial Studies 24 (2011) 8, pp. 2822-2863
This article presents a market equilibrium model of CEO assignment, pay, and incentives under risk aversion and moral hazard. Each of the three outcomes can be summarized by a single closed-form equation. In the presence of moral hazard, assignment is distorted from positive assortative matching...