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Compensation disparity between risk averse agents under adverse selection and moral hazard

Title
Compensation disparity between risk averse agents under adverse selection and moral hazard
Authors
Kim S.H.
Ewha Authors
김성현
SCOPUS Author ID
김성현scopus
Issue Date
2021
Journal Title
Journal of Economic Theory and Econometrics
ISSN
1229-2893JCR Link
Citation
Journal of Economic Theory and Econometrics vol. 32, no. 2, pp. 74 - 91
Keywords
Incentive ContractLEN ModelPay Gap
Publisher
Korean Econometric Society
Indexed
SCOPUS scopus
Document Type
Article
Abstract
We extend the LEN moral hazard model to allow for adverse selection and derive the optimal incentive contract menu. We show that both moral hazard and adverse selection separately cause compensation disparity between agents with different degrees of risk aversion. We also show that adverse selection aggravates the compensation disparity when more risk averse agents form a minority of the agent population. © 2021, Korean Econometric Society. All rights reserved.
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사회과학대학 > 경제학전공 > Journal papers
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