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https://hdl.handle.net/20.500.11851/1116
Title: | Optimality of Linearity With Collusion and Renegotiation | Authors: | Barlo, Mehmet Özdoğan, Atabay Ayça |
Keywords: | aggregation agency teams incentives |
Publisher: | Elsevier Science Bv | Source: | Barlo, M., & Özdog, A. (2014). Optimality of linearity with collusion and renegotiation. Mathematical Social Sciences, 71, 46-52. | Abstract: | This study analyzes a continuous-time N-agent Brownian moral hazard model with constant absolute risk aversion (CARA) utilities, in which agents' actions jointly determine the mean and variance of the outcome process. In order to give a theoretical justification for the use of linear contracts, as in Holmstrom and Milgrom (1987), we consider a variant of its generalization given by Sung (1995), into which collusion and renegotiation possibilities among agents are incorporated. In this model, we prove that there exists a linear and stationary optimal compensation scheme which is also immune to collusion and renegotiation. (C) 2014 Elsevier B.V. All rights reserved. | URI: | https://doi.org/10.1016/j.mathsocsci.2014.04.004 https://hdl.handle.net/20.500.11851/1116 |
ISSN: | 0165-4896 |
Appears in Collections: | İktisat Bölümü / Department of Economics Scopus İndeksli Yayınlar Koleksiyonu / Scopus Indexed Publications Collection WoS İndeksli Yayınlar Koleksiyonu / WoS Indexed Publications Collection |
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