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Advisor(s)
Abstract(s)
I study the role the agent's wealth plays in the principal–agent matching with moral hazard and limited liability. I consider wealth and talent as the agent's type and size as the firm's (principal's) type. Wealthier agents match with bigger firms, when talent is homogeneous among them, whereas for equally wealthy agents, more talented agents will match with bigger firms. I describe economic conditions over types such that pairs of higher types will write contracts in which the agent gets more than the limited liability rents. Finally, I write conditions on wealth for assortative matching in talent to hold.
Description
Artigo em revista científica internacional
Keywords
Model of moral hazard Wealthier agents Positive assortative matching (PAM) Generalized increasing differences (GID)
Citation
Fagandini, P. (2021). Wealth and the principal–agent matching. Managerial and Decision Economics, 1– 14. https://doi.org/10.1002/mde.3402
Publisher
John Wiley & Sons