Abstract

  


 



Moral Hazard Contracts: Does One Size Fit All?


Alexander K. Koch


University of Aarhus - School of Economics and Management; Institute for the Study of Labor (IZA)

Eloic Peyrache


HEC Paris - Economics & Decision Sciences
November 2006

IZA Discussion Paper No. 2463

Abstract:     
Incentive theory predicts that contract terms should respond to differences in agents' productivities. Firms' practice of anonymous contracts thus appears puzzling. We show that such a "one-size-fits-all" approach can be reconciled with standard agency theory if careers are marked by frequent transitions between employers, and agents have career concerns because complete long-term contracts are not feasible.

Number of Pages in PDF File: 9

Keywords: anonymous contracts, career concerns, incentive contracts, reputation

JEL Classification: D80, J33, L14, M12

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Date posted: December 5, 2006  

Suggested Citation

Koch, Alexander K. and Peyrache, Eloic, Moral Hazard Contracts: Does One Size Fit All? (November 2006). IZA Discussion Paper No. 2463. Available at SSRN: http://ssrn.com/abstract=949181

Contact Information

Alexander K. Koch (Contact Author)
University of Aarhus - School of Economics and Management ( email )
Building 1322
DK-8000 Aarhus C
Denmark
+45 8942 2137 (Phone)
HOME PAGE: http://mit.econ.au.dk/vip_htm/akoch/
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Eloic Peyrache
HEC Paris (Groupe HEC) - Economics & Decision Sciences ( email )
Paris
France

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