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2018-11-15T08:53:35Z
2018-11-15T08:53:35Z
2007-05
JRD30-2-02
http://repository.krei.re.kr/handle/2018.oak/18678
This paper analyzes optimal self-enforcing termination contracts under the assumptions that the agent (e.g. grower) must make relationship-specific investments prior to contracting, that the principal (e.g. integrator or processor) has ex post full bargaining power due to monopsony power, and that performance is subjectively measured. In the optimal self-enforcing termination contract, the principal motivates the agent by rewarding the agent through continuation of the relationship for high levels of performance and penalizes the agent through termination for low levels of performance. Performance bonuses are no longer used. When the agent must make relationship-specific investment, the principal may not pay positive rents. This implies that the relationship-specificity of investment increases the principal's expected payoff, whereas it decreases the agent's.
This paper analyzes optimal self-enforcing termination contracts under the assumptions that the agent (e.g. grower) must make relationship-specific investments prior to contracting, that the principal (e.g. integrator or processor) has ex post full bargaining power due to monopsony power, and that performance is subjectively measured. In the optimal self-enforcing termination contract, the principal motivates the agent by rewarding the agent through continuation of the relationship for high levels of performance and penalizes the agent through termination for low levels of performance. Performance bonuses are no longer used. When the agent must make relationship-specific investment, the principal may not pay positive rents. This implies that the relationship-specificity of investment increases the principal's expected payoff, whereas it decreases the agent's.
I. IntroductionII. Model AssumptionsIII. Optimal Termination ContractsIV. Conclusion and Implication
I. IntroductionII. Model AssumptionsIII. Optimal Termination ContractsIV. Conclusion and Implication
한국농촌경제연구원
Relational Contracts in Moral Hazard with Subjective Performance Measures
Relational Contracts in Moral Hazard with Subjective Performance Measures
KREI 논문
46
19
Lee, Myeongki
page. 19 - 46
relational contract
subjective performance measures
relationship-specific investment
moral hazard
termination contract
relational contract
subjective performance measures
relationship-specific investment
moral hazard
termination contract