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American Economic Review Vol. 100 No. 1 2010

All-or-Nothing Monitoring: Comment

Bo Chen

Department of Economics, Southern Methodist University, 3300 Dyer Street, Suite 301, Umphrey Lee Center, Dallas, TX 75275.

Abstract

Zhao (2008) presents an interesting “all-or-nothing monitoring” result for a multitask moral hazard agency problem with partial effort observation. We argue that the optimal contract based on the non-verifiable observation of the agent's effort in Zhao (2008) can be regarded as a limitation on the incentive schemes available to the principal. I then propose some arguably more appropriate approaches for analyzing such agency problems. (D82, D86, M54)

DOI
10.1257/aer.100.1.625
Volume
100
Issue
1
Pages
625-627
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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