The Simple Analytics of the Principal-Agent Incentive Contract

Traditional teaching assumes that firms are run by owner-managers. In fact, ownership and management are frequently separated, and a conflict of interests may exist. The principal-agent literature is applied to this problem in a simple form useful for the introductory economics course.

[1]  Bengt Holmstrom,et al.  Moral Hazard and Observability , 1979 .

[2]  Bengt Holmstrom,et al.  Moral Hazard in Teams , 1982 .

[3]  New Directions in the Economic Theory of Agency , 1984 .

[4]  Robert E. Verrecchia,et al.  Optimal Managerial Contracts and Equilibrium Security Prices , 1982 .

[5]  E. Fama,et al.  Agency Problems and Residual Claims , 1983 .

[6]  Thomas M Carroll,et al.  The Determinants of Executive Salaries: An Econometric Survey , 1980 .

[7]  M. Harris,et al.  Some results on incentive contracts with applications to education and employment, health insurance, and law enforcement. , 1978, The American economic review.

[8]  R. Santerre,et al.  Dominant stockownership and profitability , 1986 .

[9]  S. Shavell.  Risk Sharing and Incentives in the Principal and Agent Relationship , 1979 .

[10]  Barry Nalebuff,et al.  Information, Competition, and Markets , 1983 .

[11]  H. Demsetz,et al.  Production, Information Costs, and Economic Organization , 1975, IEEE Engineering Management Review.

[12]  Sherwin Rosen,et al.  Authority, Control, and the Distribution of Earnings , 1982 .

[13]  R. Arnould,et al.  Agency costs in banking firms: An analysis of expense preference behavior , 1985 .

[14]  Joseph E. Stiglitz,et al.  Incentives and Risk Sharing in Sharecropping , 1974 .

[15]  M. Harris,et al.  Optimal incentive contracts with imperfect information , 1979 .

[16]  J. Mirrlees.  The Optimal Structure of Incentives and Authority Within an Organization , 1976 .

[17]  E. Fama.  Agency Problems and the Theory of the Firm , 1980, Journal of Political Economy.

[18]  S. Ross.  The Economic Theory of Agency: The Principal's Problem , 1973 .

[19]  E. Fama,et al.  Separation of Ownership and Control , 1983, The Journal of Law and Economics.

[20]  W. McEachern.  CORPORATE CONTROL AND RISK , 1976 .

[21]  Sanford J. Grossman,et al.  AN ANALYSIS OF THE PRINCIPAL-AGENT PROBLEM , 1983 .

[22]  M. C. Jensen,et al.  Theory of the Firm , 1976 .

[23]  H. Demsetz,et al.  The Structure of Corporate Ownership: Causes and Consequences , 1985, Journal of Political Economy.

[24]  E. A. Dyl,et al.  Corporate control and management compensation: Evidence on the agency problem , 1988 .