The Risk-Sharing Problem Under Limited Liability Constraints in a Single-Period Model

This work provides analysis of a variant the Risk-Sharing Principal-Agent problem in single period setting with additional constant lower and upper bounds on wage paid to Agent. The effect extra constraints optimal contract existence is studied leads conditions underlying utility functions under which an optimum may be attained. Solution characterization then provided along derivation Borch rule for Limited Liability. Finally, some applications, including CARA case, are discussed.