Moral Hazard and Other-Regarding Preferences

Hideshi Itoh

doi:10.1007/978-4-431-55501-8_17

Moral Hazard and Other-Regarding Preferences

Hideshi Itoh^*

^*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceeding › Chapter

Abstract

This chapter aims at obtaining new theoretical insights by combining the standard moral hazard models of principal-agent relationships with theories of other-regarding preferences, in particular inequity aversion theory. The principal is in general worse off, as the agent cares more about the wellbeing of the principal. When there are multiple symmetric agents who care about each other's wellbeing, the principal can optimally exploit their other-regarding nature by designing an appropriate interdependent contract such as a "fair" team contract or a relative performance contract. The approach taken in this chapter can shed light on issues on endogenous preferences within organizations.

Original language	English
Title of host publication	Behavioral Interactions, Markets, and Economic Dynamics
Subtitle of host publication	Topics in Behavioral Economics
Publisher	Springer Japan
Pages	483-517
Number of pages	35
ISBN (Electronic)	9784431555018
ISBN (Print)	9784431555001
DOIs	https://doi.org/10.1007/978-4-431-55501-8_17
Publication status	Published - 2015 Sept 12
Externally published	Yes

Keywords

Behavioral contract theory
Inequity aversion
Moral hazard

ASJC Scopus subject areas

Economics, Econometrics and Finance(all)
Business, Management and Accounting(all)
Psychology(all)

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10.1007/978-4-431-55501-8_17

Cite this

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Moral Hazard and Other-Regarding Preferences

Abstract

Keywords

ASJC Scopus subject areas

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