Fair Contracts

Ishiguro, Shingo

Discussion Papers In Economics And Business, 2011, 11-30

Number of Access:374（2025-09-05 05:10 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/13634

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Title
Fair Contracts
Creator
NRID
1000060288496 1000060288496
researchmap permalink
ShingoIshiguro ShingoIshiguro
Scopus Author ID
56236943400 56236943400
CreatorName
Ishiguro, Shingo
Subject
Moral Hazard
Incentive Contracts
Fairness
Abstract
In this paper we present an axiomatic approach to characterize the optimalcontracts, which we call “fair contracts," in the general moral hazard model.The two main axioms we employ are incentive efficiency and no–envyness. Theincentive efficiency requires that agents of organization select the Pareto efficientcontracts among all possible incentive compatible contracts. No–envyness isequity requirement to ensure that each agent does not envy contracts of othersin the same organization. We then show that, due to the tension betweenincentive efficiency and no-envyness, fair contracts have the very simple featurethat risk averse agents are offered the fixed wage to choose only the least costlyaction.
Publisher
Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University
Source Title
Discussion Papers In Economics And Business
Volume (Issue)
11-30
Date of Issued
2011-11
Language
English
Handle URL
https://hdl.handle.net/11094/13634
NCID
AA1160366X
Relation.references
URI
http://www2.econ.osaka-u.ac.jp/library/global/dp/1130.pdf
Access Rights
metadata only access
Category
ディスカッション／ワーキング・ペーパー DP/WP
Discussion Papers In Economics And Business