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Information Revelation and Principal-Agent Contracts

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  • Alvi, Eskander

Abstract

In an environment in which effort is private information to the worker, agreements between a risk-neutral principal and a risk-a verse agent are likely to be risk-sharing and information-revealing m echanisms. It is shown that principal-agent contracts have significan t implications for both compensation and employment rules in a simple work-sharing model. In general, such contracts involve incomplete in come insurance and involuntary or excessive underemployment. This sup ports the view that models of worker-specific information, particular ly with moral hazard, provide a natural explanation of underemploymen t. Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Alvi, Eskander, 1988. "Information Revelation and Principal-Agent Contracts," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 132-146, January.
    • Handle: RePEc:ucp:jlabec:v:6:y:1988:i:1:p:132-46
    DOI: 10.1086/298178
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    Cited by:

    1. Arvind Ashta, 2017. "Work-sharing from Different Angles: A literature review," Working Papers CEB 17-033, ULB -- Universite Libre de Bruxelles.
    2. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-254, April.

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