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Risk sharing vs. incentives: Contract design under two-sided heterogeneity
Journal article   Peer reviewed

Risk sharing vs. incentives: Contract design under two-sided heterogeneity

Konstantinos Serfes
Economics letters, v 88(3), pp 343-349
2005

Abstract

Endogenous matching Risk sharing
We study the matching patterns between heterogeneous principals and agents in a principal agent model. The resulting equilibrium relationship between risk and incentives could be negative, positive or U-shaped. These results may provide an explanation for the absence of systematic empirical support for the standard risk model.

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Economics
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