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A SIMPLE PRINCIPAL‐AGENT EXPERIMENT FOR THE CLASSROOM
Author(s) -
ORTMANN ANDREAS,
COLANDER DAVID
Publication year - 1997
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1997.tb01921.x
Subject(s) - simple (philosophy) , moral hazard , principal (computer security) , incentive , variety (cybernetics) , enforcement , economics , microeconomics , principal–agent problem , mathematical economics , computer science , computer security , political science , artificial intelligence , management , epistemology , law , corporate governance , philosophy
In this note we describe a simple, flexible and instructive moral hazard experiment. It can be used in a variety of classes, including principles classes, to illustrate the basic incentive conflicts in principal‐agent interactions, the importance of information, and the power of reputational enforcement.