Next Article in Journal
The Incompatibility of Pareto Optimality and Dominant-Strategy Incentive Compatibility in Sufficiently-Anonymous Budget-Constrained Quasilinear Settings
Previous Article in Journal
An Adaptive Learning Model in Coordination Games
Previous Article in Special Issue
Multidimensional Screening with Complementary Activities: Regulating a Monopolist with Unknown Cost and Unknown Preference for Empire Building
Article

The Optimality of Team Contracts

1
FASS, Sabancı University, Tuzla, Istanbul 34956, Turkey
2
Department of Economics, TOBB University of Economics and Technology, Sögütözü Cad. No. 43, Sögütözü, Ankara 06560, Turkey
*
Author to whom correspondence should be addressed.
Received: 11 April 2013 / Revised: 31 October 2013 / Accepted: 11 November 2013 / Published: 18 November 2013
(This article belongs to the Special Issue Contract Theory)
This paper analyzes optimal contracts in a linear hidden-action model with normally distributed returns possessing two moments that are governed jointly by two agents who have negative exponential utilities. They can observe and verify each others’ effort levels and draft enforceable side-contracts on effort levels and realized returns. Standard constraints, resulting in incentive contracts, fail to ensure implementability, and we examine centralized collusion-proof contracts and decentralized team contracts, as well. We prove that the principal may restrict attention to team contracts whenever returns from the project satisfy a mild monotonicity condition. View Full-Text
Keywords: principal-agent problems; linear contracts; collusion; team; decentralization principal-agent problems; linear contracts; collusion; team; decentralization
MDPI and ACS Style

Barlo, M.; Özdoğan, A. The Optimality of Team Contracts. Games 2013, 4, 670-689. https://0-doi-org.brum.beds.ac.uk/10.3390/g4040670

AMA Style

Barlo M, Özdoğan A. The Optimality of Team Contracts. Games. 2013; 4(4):670-689. https://0-doi-org.brum.beds.ac.uk/10.3390/g4040670

Chicago/Turabian Style

Barlo, Mehmet, and Ayça Özdoğan. 2013. "The Optimality of Team Contracts" Games 4, no. 4: 670-689. https://0-doi-org.brum.beds.ac.uk/10.3390/g4040670

Find Other Styles

Article Access Map by Country/Region

1
Only visits after 24 November 2015 are recorded.
Back to TopTop