Fagart, Marie-Cécile; Fluet, Claude - Centre Interuniversitaire sur le Risque, les Politiques … - 2012
We provide sufficient conditions for the first-order approach in the principal-agent problem when the agent’s utility has the non-separable form u(y - c(a)) where y is the contractual payoff and c(a) is the money cost of effort. We first consider a decision-maker facing prospects which cost...