relation: http://eprints.imtlucca.it/1855/
title: Optimal Incentives in a Principal-Agent Model with Endogenous Technology
creator: Marini, Marco A.
creator: Polidori, Paolo
creator: Ticchi, Davide
creator: Teobaldelli, Désirée
subject: HB Economic Theory
subject: HD61 Risk Management
description: One of the standard predictions of the agency theory is that more incentives can be given to agents with lower risk aversion. In this paper we show that this relationship may be absent or reversed when the technology is endogenous and projects with a higher e¢ ciency are also riskier. Using a modi ed version of the Holmstrom and Milgrom's (1987) framework, we obtain that lower agent's risk aversion unambiguously leads to higher incentives when the technology function linking efficiency and riskiness is elastic, while the risk aversion-incentive relation- ship can be positive when this function is rigid.
publisher: Università degli studi di Urbino. Facoltà di economia
date: 2013
type: Working Paper
type: NonPeerReviewed
identifier:   Marini, Marco A. and Polidori, Paolo and Ticchi, Davide and Teobaldelli, Désirée  Optimal Incentives in a Principal-Agent Model with Endogenous Technology.  Working Paper  #04/2013    Università degli studi di Urbino. Facoltà di economia    ISSN 1974-4110.      
relation: http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_13_04.pdf