Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/179167
Authors: 
Marini, Marco A.
Polidori, Paolo
Teobaldelli, Désirée
Ticchi, Davide
Year of Publication: 
2018
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 9 [Year:] 2018 [Issue:] 1 [Pages:] 1-13
Abstract: 
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 efficiency are also riskier. Using a modified version of the Holmstrom and Milgrom's 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 relationship can be positive when this function is rigid.
Subjects: 
principal-agent
incentives
risk aversion
endogenous technology
JEL: 
D21
D81
D82
D86
M52
O33
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
Appears in Collections:
Social Media Mentions:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.