The Issue Of Contract Theory Video
Contractarianism: Crash Course Philosophy #37 The Issue Of Contract TheoryThe Issue Of Contract Theory - are
In economics , contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of information asymmetry. Because of its connections with both agency and incentives , contract theory is often categorized within a field known as Law and economics. One prominent application of it is the design of optimal schemes of managerial compensation. In the field of economics, the first formal treatment of this topic was given by Kenneth Arrow in the s. In , Oliver Hart and Bengt R. A standard practice in the microeconomics of contract theory is to represent the behaviour of a decision maker under certain numerical utility structures, and then apply an optimization algorithm to identify optimal decisions. Such a procedure has been used in the contract theory framework to several typical situations, labeled moral hazard , adverse selection and signalling. The spirit of these models lies in finding theoretical ways to motivate agents to take appropriate actions, even under an insurance contract. The main results achieved through this family of models involve: mathematical properties of the utility structure of the principal and the agent, relaxation of assumptions, and variations of the time structure of the contract relationship, among others. It is customary to model people as maximizers of some von Neumann—Morgenstern utility functions , as stated by expected utility theory.
Discuss; 1.
Explain the main issue of moral hazard. Discuss several factors that make it either impossible or unwarranted to fully internalize the consequences of actions. Describe and discuss the main factors that influence the trade-off between risk sharing and incentives.
Primary nav
In which sense could ethical behavior solve or at least mitigate the moral hazard problem? Discuss insights from prospect theory that may influence the consequences of bonus contracts. Discuss insights from experimental economics that may influence the consequences of bonus contracts. Discuss the strength and weaknesses of the economic approach to incentives from Theor subjective point of view.
Navigation menu
Place your order now for a similar paper and have exceptional work written by our team of experts to guarantee you A Results. Source link. Thanks for installing the Bottom of every post plugin by Corey Salzano.
Contact me if you need custom WordPress plugins or website design. Hi there! Click one of our representatives below and we will get back to you as soon as possible. Published by at.
Categories Uncategorized.]
I can ask you?
You will not prompt to me, where I can read about it?