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dc.contributor.authorGOTTARDI, Piero
dc.contributor.authorTALLON, Jean-Marc
dc.contributor.authorGHIRARDATO, Paolo
dc.date.accessioned2018-02-06T09:49:40Z
dc.date.available2018-02-06T09:49:40Z
dc.date.issued2017
dc.identifier.citationGames and economic behavior, 2017, Vol. 103, pp. 145-167en
dc.identifier.issn0899-8256
dc.identifier.urihttps://hdl.handle.net/1814/51246
dc.descriptionAvailable online 15 February 2016.en
dc.description.abstractThis paper studies the costs and benefits of delegating decisions to superiorly informed agents, that is of adopting flexible contracts, relative to the use of rigid, non-discretionary contracts. The main focus of the paper lies in the analysis of the costs of delegation, primarily agency costs, versus their benefits, primarily the flexibility of the action choice in two different environments, one with risk and one with ambiguity. We first determine and characterize the properties of the optimal flexible contract. We then show that the higher the agent's degree of risk aversion, the higher is the agency costs of delegation and the less profitable a flexible contract relative to a rigid one. When the parties have imprecise probabilistic beliefs, the agent's degree of imprecision aversion introduces another agency cost, which again reduces the relative profitability of flexible contracts.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.publisherElsevieren
dc.relation.ispartofGames and economic behavioren
dc.rightsinfo:eu-repo/semantics/openAccessen
dc.titleFlexible contractsen
dc.typeArticleen
dc.identifier.doi10.1016/j.geb.2016.01.013
dc.identifier.volume103en
dc.identifier.startpage145en
dc.identifier.endpage167en
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