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"Principal - Agent" Problem in the Context of the Economic Survival
[Problém "principál - agent" při maximalizaci pravděpodobnosti ekonomického přežití]

Author

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  • Jiří Hlaváček
  • Michal Hlaváček

Abstract

This paper analyses problems within the asymmetric information models (principal agent models) where we replace standard assumption of maximisation of expected income by maximisation of probability of economic survival. This paper concentrates on two basic models - adverse selection model and moral hazard model. In both cases the effect of asymmetry of information gets weaker or even disappears. Contrary to standard approach the competitive Pareto effective equilibrium could exists in both models with pooled contract with full coverage of possible accident by the principal.

Suggested Citation

  • Jiří Hlaváček & Michal Hlaváček, 2006. ""Principal - Agent" Problem in the Context of the Economic Survival [Problém "principál - agent" při maximalizaci pravděpodobnosti ekonomického přežití]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2006(3), pages 18-33.
    • Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:81:p:18-33
    DOI: 10.18267/j.aop.81
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    References listed on IDEAS

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    Cited by:

    1. Karel Janda, 2006. "Lender and Borrower as Principal and Agent," Working Papers IES 2006/24, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2006.
    2. Michal Bobek, 2014. "The Principal-Agent Theory and its Influence on the Quality of Assurance Services [Vliv vztahů zastoupení na kvalitu informací poskytovaných ověřovacími službami]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2014(2), pages 52-68.

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    More about this item

    Keywords

    moral hazard; adverse selection; probability of survival; Pareto distribution of probability;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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