Please use this identifier to cite or link to this item: https://hdl.handle.net/20.500.11851/1116
Title: Optimality of linearity with collusion and renegotiation
Authors: Barlo, Mehmet
Özdoğan, Atabay Ayça
182115
Keywords: aggregation
agency
teams
incentives
Issue Date: Sep-2014
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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