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- Title
Distributions for the first-order approach to principal-agent problems.
- Authors
Licalzi, Marco; Spaeter, Sandrine
- Abstract
The first-order approach is a technical shortcut widely used in agency problems. The best known set of sufficient conditions for its validity are due to Mirrlees and Rogerson and require that the distribution function is convex in effort and has a likelihood ratio increasing in output. Only one nontrivial example was so far known to satisfy both properties. This note provides two rich families of examples displaying both properties.
- Subjects
DISTRIBUTION (Probability theory); CONVEX domains; FIRST-order logic; CALCULUS of variations; AGENCY (Law); POINT set theory; PROBABILITY theory; PROBLEM solving
- Publication
Economic Theory, 2003, Vol 21, Issue 1, p167
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-001-0250-y