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Optimal contracts when the players think different

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorDumav, Martin
dc.contributor.authorKhan, Urmee
dc.contributor.authorRigotti, Luca
dc.contributor.editorUniversidad Carlos III. Departamento de Economíaes
dc.date.accessioned2023-10-03T15:58:07Z
dc.date.available2023-10-03T15:58:07Z
dc.date.issued2023-10-03
dc.description.abstractIn a moral hazard model with heterogeneous beliefs, we show that the efficient risksharing contract does not result in a constant wage and the optimal first-best contract may not be increasing in output. When actions are unobservable, heterogeneity in beliefs implies that the monotone likelihood ratio ranking does not ensure that the wage scheme in the optimal contract is non-decreasing in output. This is because differences in beliefs may affect the incentive provision in a non-monotone way. The standard monotonicity result with common beliefs extends to belief heterogeneity when the agent is more optimistic than the principal. Yet, in the reverse case, the optimal contract can be non-monotone.en
dc.identifier.issn2340-5031es
dc.identifier.urihttps://hdl.handle.net/10016/38519
dc.identifier.uxxiDT/0000002090es
dc.language.isoenges
dc.relation.ispartofseriesWorking paper. Economicsen
dc.relation.ispartofseries23-07es
dc.relation.projectIDGobierno de España. ECO2017-86261-Pes
dc.relation.projectIDComunidad de Madrid. MDM 2014-0431es
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España*
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/*
dc.subject.ecienciaEconomíaes
dc.subject.jelD82es
dc.subject.jelD86es
dc.subject.jelM52es
dc.subject.otherContractingen
dc.subject.otherHeterogeneous Beliefsen
dc.subject.otherMonotone Likelihood Ratioen
dc.subject.otherMoral Hazarden
dc.titleOptimal contracts when the players think differenten
dc.typeworking paper*
dspace.entity.typePublication
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