IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v11y1997i1p129-155.html
   My bibliography  Save this article

Ranking agencies under moral hazard

Author

Listed:
  • Bharat Sarath

    (Stern School, New York University, 40 West Fourth Street, New York, NY 10012, USA)

  • Edward Henry Robbins

    (Financial Economics Analytics and Research, 9140 Santayana Drive, Fairfax, VA 22031, USA)

Abstract

We provide rankings across uncertain outputs generated by agents functioning within the Principal-Agent paradigm. For agents who are identical except for their productivity, a necessary (but not sufficient) condition for an agent to be preferred is that her output dominates that of lower agents in the sense of First Degree Stochastic Dominance (FDSD) at every level of effort. Sufficient conditions are based on Blackwell's ranking of information systems and involves a characterization of FDSD using stochastic matrices. Our conditions for ranking outputs extends earlier results concerning the value of information within the agency framework. We also show how our techniques can be adapted to rank agents even if the first-order approach for determining optimal contracts fails to hold.

Suggested Citation

  • Bharat Sarath & Edward Henry Robbins, 1997. "Ranking agencies under moral hazard," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 129-155.
    • Handle: RePEc:spr:joecth:v:11:y:1997:i:1:p:129-155
    Note: Received: April 2, 1996; revised version: October 30, 1996
    as

    Download full text from publisher

    File URL: http://link.springer.de/link/service/journals/00199/papers/7011001/70110129.pdf
    Download Restriction: Access to the full text of the articles in this series is restricted
    File URL: http://link.springer.de/link/service/journals/00199/papers/7011001/70110129.ps.gz
    Download Restriction: Access to the full text of the articles in this series is restricted
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:11:y:1997:i:1:p:129-155. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.