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Contracts and Money Revisited

  • Antoine Martin and Cyril Monnet
Published/Copyright: January 10, 2006
Contributions in Macroeconomics
From the journal Contributions in Macroeconomics Volume 6 Issue 1

Abstract

Jovanovic and Ueda (1997) consider a principal-agent model with moral hazard and renegotiation. A noisy signal of the agent's output is observed before renegotiation takes place and actual output is revealed after renegotiation. If the agent is restricted to choose pure strategies it can be shown that the only renegotiation-proof contracts which induce optimal effort by the agent depend only on the signal and not on actual output. In this paper we show the restriction to pure strategies is crucial to the result, at least when the quality of the signal is not very good.

Keywords: Moral Hazard; Renegotiation; Theory of Uncertainty and Information
Published Online: 2006-01-10

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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  23. Contracts and Money Revisited
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https://doi.org/10.2202/1534-5998.1296
Keywords for this article
Moral Hazard; Renegotiation; Theory of Uncertainty and Information

Articles in the same Issue

  1. Heterogeneity in Price Stickiness and the Real Effects of Monetary Shocks
  2. Frontiers Article
  3. 10.2202/1534-6013.1320
  4. Advances Article
  5. Monetary Policy and Uncertainty about the Natural Unemployment Rate: Brainard-Style Conservatism versus Experimental Activism
  6. Quantifying the Effects of the Demographic Transition in Developing Economies
  7. Inflation, Prices, and Information in Competitive Search
  8. Contributions Article
  9. Inflation Inertia in Sticky Information Models
  10. Job Separation Under Uncertainty and the Wage Distribution
  11. A Closed Form Solution to the Ramsey Model
  12. Convergence and Stability in U.S. Employment Rates
  13. What Does the Solow Model Tell Us about Economic Growth?
  14. Consumption and Health
  15. Capital Maintenance versus Technology Adoption Under Embodied Technical Progress
  16. Let a Thousand Models Bloom: The Advantages of Making the FOMC a Truly 'Open Market'
  17. Does Inflation Grease the Wheels of the Labor Market?
  18. The Relative Price and Relative Productivity Channels for Aggregate Fluctuations
  19. A Search-Theoretic Monetary Business Cycle Model with Capital Formation
  20. Price-Level Determinacy, Lower Bounds on the Nominal Interest Rate, and Liquidity Traps
  21. Real Business Cycle Theory and the Great Depression: The Abandonment of the Abstentionist Viewpoint
  22. Topics Article
  23. Contracts and Money Revisited
  24. On the Use of Substitutability as a Measure of Competition
  25. Can the AK Model Be Rescued? New Evidence from Unit Root Tests with Good Size and Power
  26. How Tight Should One's Hands be Tied? Fear of Floating and the Credibility of Exchange Rate Regimes
  27. Uncertainty and Debt-Maturity in Emerging Markets
  28. Quantitative Monetary Easing and Risk in Financial Asset Markets
  29. Using Investment Data to Assess the Importance of Price Mismeasurement
  30. Biased Technical Change and Capital-Labour Substitution in Finland, 1902-2003
  31. Long-Run Money Growth and the Liquidity Effect
  32. Differentiability of the Efficient Frontier when Commitment to Risk Sharing is Limited
  33. A Model of Veblenian Growth
  34. Human Capital Composition, R&D and the Increasing Role of Services
  35. The Allocation of Labor and Endogenous Search Decisions
  36. Bank Lending with Imperfect Competition and Spillover Effects
  37. Convergence Across Italian Regions and the Role of Technological Catch-Up
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