The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.
Moral Hazard in Teams
Open accessAbstract
This article studies moral hazard with many agents. The focus is on two features that are novel in a multiagent setting: free riding and competition. The free-rider problem implies a new role for the principal: administering incentive schemes that do not balance the budget. This new role is essential for controlling incentives and suggests that firms in which ownership and labor are partly separated will have an advantage over partnerships in which output is distributed among agents. A new characterization of informative (hence valuable) monitoring is derived and applied to analyze the value of relative performance evaluation. It is shown that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally. Competition per se is worthless. The role of aggregate measures in relative performance evaluation is also explored, and the implications for investment rules are discussed.
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Citations
Cites
Good News and Bad News: Representation Theorems and Applications
Milgrom, P. R. (1981) · The Bell Journal of Economics · doi:10.2307/3003562 · Cited by 3,123
Cited by
Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476
Multitask principal – agent analyses: Incentive contracts, asset ownership, and job design
Holmstrom, B., & Milgrom, P. (1991) · The Journal of Law, Economics, and Organization · doi:10.1093/jleo/7.special_issue.24 · Cited by 6,046
Self-citationDisclosure, Liquidity, and the Cost of Capital
DIAMOND, D. W., & VERRECCHIA, R. E. (1991) · The Journal of Finance · doi:10.1111/j.1540-6261.1991.tb04620.x · Cited by 3,836
The Provision of Incentives in Firms
Prendergast, C. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.1.7 · Cited by 3,338
General purpose technologies ‘Engines of growth’?
Bresnahan, T. F., & Trajtenberg, M. (1995) · Journal of Econometrics · doi:10.1016/0304-4076(94)01598-t · Cited by 2,879
Metadata
- Authors
- Holmstrom, B.
- Venue
- The Bell Journal of Economics
- Publisher
- JSTOR
- Published
- 1982
- Volume
- 13
- Issue
- 2
- Pages
- 324
- ISSN
- 0361-915X (ISSN-L)
- OpenAlex
- W1542323922
- Cited by
- 4,903
- References
- 1
- FWCI
- 23.33
- Type
- journal article
- Language
- en
- Open access
- green
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