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A Solvable Time-Inconsistent Principal-Agent Problem
Joint Authors
Source
Discrete Dynamics in Nature and Society
Issue
Vol. 2018, Issue 2018 (31 Dec. 2018), pp.1-15, 15 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2018-08-01
Country of Publication
Egypt
No. of Pages
15
Main Subjects
Abstract EN
We consider the dynamic contract model with time inconsistency preference of principal-agent problem to study the influence of the time inconsistency preference on the optimal effort and the optimal reward mechanism.
We show that when both the principal and the agent are time-consistent, the optimal effort and the optimal reward are the decreasing functions of the uncertain factor.
And when the agent is time-inconsistent, the impatience of the agent has a negative impact on the optimal contract.
The higher the discount rate of the agent is, the lower the efforts provided; agents tend to the timely enjoyment.
In addition, when both the principal and the agent are time-inconsistent, in a special case, their impatience can offset the impact of uncertainty factor on the optimal contract, but, in turn, their impatience will affect the contract.
American Psychological Association (APA)
Li, Chao& Qiu, Zhijian. 2018. A Solvable Time-Inconsistent Principal-Agent Problem. Discrete Dynamics in Nature and Society،Vol. 2018, no. 2018, pp.1-15.
https://search.emarefa.net/detail/BIM-1152870
Modern Language Association (MLA)
Li, Chao& Qiu, Zhijian. A Solvable Time-Inconsistent Principal-Agent Problem. Discrete Dynamics in Nature and Society No. 2018 (2018), pp.1-15.
https://search.emarefa.net/detail/BIM-1152870
American Medical Association (AMA)
Li, Chao& Qiu, Zhijian. A Solvable Time-Inconsistent Principal-Agent Problem. Discrete Dynamics in Nature and Society. 2018. Vol. 2018, no. 2018, pp.1-15.
https://search.emarefa.net/detail/BIM-1152870
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1152870