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Optimal Incentives Schemes under Homo Moralis Preferences

Department of Economics and Finance, Tor Vergata University of Rome, Via Columbia, 2 00133 Rome, Italy
Academic Editors: Luís Santos-Pinto and Ulrich Berger
Received: 25 February 2021 / Revised: 10 March 2021 / Accepted: 15 March 2021 / Published: 19 March 2021
This study focuses on the optimal incentive schemes in a multi-agent moral hazard model, where each agent has other-regarding preferences and an individual measure of output, with both being observable by the principal. In particular, the two agents display homo moralis preferences. I find that, contrary to the case with purely selfish preferences, tournaments can never be optimal when agents are risk averse, and as the degree of morality increases, positive payments are made in a larger number of output realizations. Furthermore, I extend the analysis to a dynamic setting, in which a contract is initially offered to the agents, who then repeatedly choose which level of effort to provide in each period. I show that the optimal incentive schemes in this case are similar to the ones obtained in the static setting, but for the role of intertemporal discounting. View Full-Text
Keywords: moral hazard in teams; optimal contracts; homo moralis preferences moral hazard in teams; optimal contracts; homo moralis preferences
MDPI and ACS Style

Sarkisian, R. Optimal Incentives Schemes under Homo Moralis Preferences. Games 2021, 12, 28. https://0-doi-org.brum.beds.ac.uk/10.3390/g12010028

AMA Style

Sarkisian R. Optimal Incentives Schemes under Homo Moralis Preferences. Games. 2021; 12(1):28. https://0-doi-org.brum.beds.ac.uk/10.3390/g12010028

Chicago/Turabian Style

Sarkisian, Roberto. 2021. "Optimal Incentives Schemes under Homo Moralis Preferences" Games 12, no. 1: 28. https://0-doi-org.brum.beds.ac.uk/10.3390/g12010028

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