TY - JOUR
T1 - Moral hazard and other-regarding preferences
AU - Itoh, Hideshi
N1 - Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2004/3
Y1 - 2004/3
N2 - The paper 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 paper can shed light on issues on endogenous preferences within organizations.
AB - The paper 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 paper can shed light on issues on endogenous preferences within organizations.
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U2 - 10.1111/j.1468-5876.2004.00273.x
DO - 10.1111/j.1468-5876.2004.00273.x
M3 - Article
AN - SCOPUS:2042418184
VL - 55
SP - 18
EP - 45
JO - Japanese Economic Review
JF - Japanese Economic Review
SN - 1352-4739
IS - 1
ER -