Mathematics, 06.03.2020 23:44 queendolly
Suppose a risk neutral principal wants to hire an agent to do a project. The output .Y is either 1 (if successes) or 0 (if not). The probability of success depends on the agent's effort e ε [0, 1].
i. e., Pr(X = 1) = e.
The cost of effort is c(e) = 1/2e^2. Because the principal cannot directly observe e, he will write a contract on the outcome X, i. e., the principal pays the agent w_1 if it succeeds, and w_0 = 0 otherwise. The agent's monetary utility is u(w) = 3 w^1/3. The agent's outside reservation utility is assumed to be zero.
1. What's the first best effort level and contract?
2. Derive the optimal contract under moral hazard.
Answers: 2
Mathematics, 21.06.2019 13:40
Acertain standardized? test's math scores have a? bell-shaped distribution with a mean of 520 and a standard deviation of 105. complete parts? (a) through? (c)
Answers: 1
Mathematics, 21.06.2019 14:00
Which of the following is the missing term, a2, of the geometric sequence in which a1=2 and a3=200
Answers: 2
Mathematics, 21.06.2019 16:00
Given right triangle xyz, which correctly describes the locations of the sides in relation to
Answers: 1
Suppose a risk neutral principal wants to hire an agent to do a project. The output .Y is either 1 (...
Mathematics, 17.08.2020 18:01
Mathematics, 17.08.2020 18:01
Mathematics, 17.08.2020 18:01
English, 17.08.2020 18:01
Geography, 17.08.2020 18:01
History, 17.08.2020 18:01
Health, 17.08.2020 18:01
Mathematics, 17.08.2020 18:01
Physics, 17.08.2020 18:01
Mathematics, 17.08.2020 18:01
History, 17.08.2020 18:01
Computers and Technology, 17.08.2020 18:01
Social Studies, 17.08.2020 18:01
Mathematics, 17.08.2020 18:01