TY  - RPRT
EP  - 10
N1  - Working Papers Series in Economics, Mathematics and Statistics
ID  - eprints1855
N2  - 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.
M1  - working_paper
A1  - Marini, Marco A.
A1  - Polidori, Paolo
A1  - Ticchi, Davide
A1  - Teobaldelli, Désirée
PB  - Università degli studi di Urbino. Facoltà di economia
SN  - 1974-4110
UR  - http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_13_04.pdf
TI  - Optimal Incentives in a Principal-Agent Model with Endogenous Technology
AV  - none
Y1  - 2013///
KW  - Keywords: Principal-agent; Incentives; Risk aversion; Endogenous technolog   -  JEL Classification: D82
ER  -