Moral hazard with several agents. The gains from cooperation

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33 Citations (Scopus)


We consider a situation in which a principal hires two agents whose cooperation is technically profitable and study three models that incorporate different assumptions about the agents' cooperative behavior. We find a close relationship between the agents' commitment capacity and the characteristics of the optimal contract. A greater capacity to cooperate leads to more efficient outcomes. We also show that unless agents form a team, the efficient level of mutual help is not achieved in equilibrium. © 1993.
Original languageEnglish
Pages (from-to)73-100
JournalInternational Journal of Industrial Organization
Publication statusPublished - 1 Jan 1993


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