Long-Term Contracts and Moral Hazard

Abstract

This article extends the economic theory of agency to a simple class of multiperiod situations. In this context we study the role of long-term contracts in controlling moral hazard problems. We characterize the optimal long-term contract, and show that even when the environment is separable over time, the agent's compensation in one period will depend on his performance in that period and his performance in the prior periods.

Keywords

Moral hazardEconomicsTerm (time)Actuarial scienceMicroeconomicsPhysicsIncentive

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Publication Info

Year: 1983
Type: article
Volume: 14
Issue: 2
Pages: 441-441
Citations: 327
Access: Closed

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APA Style

                            
                                    Richard A. Lambert
                                
                            (1983). 
                            Long-Term Contracts and Moral Hazard. 
                            The Bell Journal of Economics
                            , 14
                            (2)
                            , 441-441.
                            https://doi.org/10.2307/3003645

Identifiers

DOI: 10.2307/3003645