Competitive agency with moral hazard.∗
نویسندگان
چکیده
Principals seek to enter a productive relationship with agents by posting general incentive contracts. A contract is exclusive and must solve both the ex post moral hazard and the ex ante competitive search problem (participation). Menus of contracts do not help hence (single) contract posting is optimal. Principal competition restores some bargaining power with the agents, to whom principals must offer a rent to attract them. Transferring utility to the agents is best achieved by improving the insurance properties of the incentive contract. This implies lower effort in equilibrium and therefore lower welfare. A planner can completely internalize the negative externality generated by principal competition and restore the first best. We also compare rationing rules; uniform public randomization is optimal.
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