On the efficiency of the rank-order contract under moral hazard and adverse selection

被引:12
作者
Yun, JY
机构
[1] Ewha University, Seoul
关键词
D O I
10.1086/209868
中图分类号
F [经济];
学科分类号
02 ;
摘要
This article analyzes the efficiency of the rank-order contract for a finite number of risk-neutral agents under both moral hazard and adverse selection. The first-best outcome is shown to be supported by a set of rank-order contracts which penalize a small fraction of agents but do so heavily. The article also shows how these rank-order contracts compare with these giving a large prize to few agents. Finally, the article provides an informal argument for why firms do not follow a penalty-giving rank-order contract in their promotion policies as often as the theory predicts.
引用
收藏
页码:466 / 494
页数:29
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