Moral hazard with several agents. The gains from cooperation

Inés Macho-Stadler; J. David Pérez-Castrillo

doi:https://doi.org/10.1016/0167-7187(93)90037-D

Moral hazard with several agents. The gains from cooperation

Inés Macho-Stadler, J. David Pérez-Castrillo

Department of Economics and Economic History

Research output: Contribution to journal › Article › Research › peer-review

29 Citations (Scopus)

Abstract

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 language	English
Pages (from-to)	73-100
Journal	International Journal of Industrial Organization
Volume	11
DOIs	https://doi.org/10.1016/0167-7187(93)90037-D
Publication status	Published - 1 Jan 1993

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AB - 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.

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