Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/257510 
Year of Publication: 
2021
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 12 [Issue:] 1 [Article No.:] 28 [Publisher:] MDPI [Place:] Basel [Year:] 2021 [Pages:] 1-22
Publisher: 
MDPI, Basel
Abstract: 
This study focuses on the optimal incentive schemes in a multi-agent moral hazard model, where each agent has other-regarding preferences and an individual measure of output, with both being observable by the principal. In particular, the two agents display homo moralis preferences. I find that, contrary to the case with purely selfish preferences, tournaments can never be optimal when agents are risk averse, and as the degree of morality increases, positive payments are made in a larger number of output realizations. Furthermore, I extend the analysis to a dynamic setting, in which a contract is initially offered to the agents, who then repeatedly choose which level of effort to provide in each period. I show that the optimal incentive schemes in this case are similar to the ones obtained in the static setting, but for the role of intertemporal discounting.
Subjects: 
homo moralis preferences
moral hazard in teams
optimal contracts
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
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