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• W2017310792 abstract "We consider a moral hazard problem where the principal is uncertain as to what the agent can and cannot do: she knows some actions available to the agent, but other, unknown actions may also exist. The principal demands robustness, evaluating possible contracts by their worst-case performance, over unknown actions the agent might potentially take. The model assumes risk-neutrality and limited liability, and no other functional form assumptions. Very generally, the optimal contract is linear. The model thus offers a new explanation for linear contracts in practice. It also introduces a flexible modeling approach for moral hazard under nonquantifiable uncertainty. (JEL D81, D82, D86)" @default.
• W2017310792 created "2016-06-24" @default.
• W2017310792 creator A5067988932 @default.
• W2017310792 date "2015-02-01" @default.
• W2017310792 modified "2023-10-05" @default.
• W2017310792 title "Robustness and Linear Contracts" @default.
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• W2017310792 doi "https://doi.org/10.1257/aer.20131159" @default.
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