Low outcomes and the first-order approach to agency problems

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    Abstract

    This paper claims that the first-order approach to agency problems can only hold if the likelihood ratio is bounded from below. None of the classic sets of sufficient conditions to validate it (Mirrlees-Rogerson (1979-1985) and Jewitt (1988)) guarantees such a condition.
    Original languageEnglish
    Pages (from-to)341-348
    JournalInvestigaciones Economicas
    Volume31
    Issue number2
    Publication statusPublished - 1 May 2007

    Keywords

    • Agency
    • First-order approach
    • Likelihood ratio

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