A principal outsources a work to an agent to deliver y units of output within one month. (a) Suppose effort is observable. How can the contract be designed so that the agent can be outsourced the first-best level of output? (b) Now suppose that effort is not observable. Suppose that the agent is risk-averse. Characterize the contract in this case, clearly mentioning first the necessary assumptions.

A principal outsources a work to an agent to deliver y units of output within one month. (a) Suppose effort is observable. How can the contract be designed so that the agent can be outsourced the first-best level of output? (b) Now suppose that effort is not observable. Suppose that the agent is risk-averse. Characterize the contract in this case, clearly mentioning first the necessary assumptions.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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