Take Action

Home | Faculty & Research Overview | Research

Research Details

On the Moral Hazard Problem without the First-Order Approach, Journal of Economic Theory

Abstract

We study the moral hazard problem without the first-order approach or other common structure. We present sufficient conditions under which the shadow value of simultaneously tightening the minimum payment and individual rationality constraints has a simple and intuitive expression. We then show how this expression can be used to perform comparative statics exercises in which we study (i) the effect of a change in the agent’s wealth on the well-being of the principal; and (ii) the effects of the outside option and minimum payment on the effort level optimally implemented.

Type

Article

Author(s)

Jeroen Swinkels, Ohad Kadan

Date Published

2013

Citations

Swinkels, Jeroen, and Ohad Kadan. 2013. On the Moral Hazard Problem without the First-Order Approach. Journal of Economic Theory. 148: 2313-2343.

READ
KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more