An Uncertain Wage Contract Model with Adverse Selection and Moral Hazard
Joint Authors
Wang, Xiulan
Wang, Jiao
Lan, Yanfei
Source
Journal of Applied Mathematics
Issue
Vol. 2014, Issue 2014 (31 Dec. 2014), pp.1-9, 9 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2014-03-27
Country of Publication
Egypt
No. of Pages
9
Main Subjects
Abstract EN
This paper considers a wage contract design problem faced by an employer (he) who employs an employee (she) to work for him in labor market.
Since the employee's ability that affects the productivity is her private information and cannot be observed by the employer, it can be characterized as an uncertain variable.
Moreover, the employee's effort is unobservable to the employer, and the employee can select her effort level to maximize her utility.
Thus, an uncertain wage contract model with adverse selection and moral hazard is established to maximize the employer's expected profit.
And the model analysis mainly focuses on the equivalent form of the proposed wage contract model and the optimal solution to this form.
The optimal solution indicates that both the employee's effort level and the wage increase with the employee's ability.
Lastly, a numerical example is given to illustrate the effectiveness of the proposed model.
American Psychological Association (APA)
Wang, Xiulan& Lan, Yanfei& Wang, Jiao. 2014. An Uncertain Wage Contract Model with Adverse Selection and Moral Hazard. Journal of Applied Mathematics،Vol. 2014, no. 2014, pp.1-9.
https://search.emarefa.net/detail/BIM-460142
Modern Language Association (MLA)
Wang, Xiulan…[et al.]. An Uncertain Wage Contract Model with Adverse Selection and Moral Hazard. Journal of Applied Mathematics No. 2014 (2014), pp.1-9.
https://search.emarefa.net/detail/BIM-460142
American Medical Association (AMA)
Wang, Xiulan& Lan, Yanfei& Wang, Jiao. An Uncertain Wage Contract Model with Adverse Selection and Moral Hazard. Journal of Applied Mathematics. 2014. Vol. 2014, no. 2014, pp.1-9.
https://search.emarefa.net/detail/BIM-460142
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-460142