Contracts and asymmetric information in the theory of the firm

Contracts and asymmetric information in the theory of the firm

at Cornell, the University of Rochester, and the Public Choice Society Meetings, Spring 1985. 0167-268 l/88/$3.50 @ 1988, Elsevier Science Pubhshers ...

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at Cornell, the University of Rochester, and the Public Choice Society Meetings, Spring 1985. 0167-268 l/88/$3.50 @ 1988, Elsevier Science Pubhshers

230

D. Easfeymd M. O’Hara, Contracts ad

asymnaetric iq?imwtion in tkfinn

between a firm’s managers and its owners [see Jensen and eckling (1976)3. Otis literature looks at the related questions r;f rkk-zhating and incentive between input owners (labor and capital) and

t firms are ObvicMl profits are constrai

D. Easley

whole (buyers and the manager) is to select an op allocation mechanism) [email protected] to the constraint th consumers and et,consumers a

and Jensen (1983).

D. Eusky

.o‘

234

D. Easiey and M. O’Hma, Contracts ad asynmetric iajbmwtion in the_&

That is, a contract is Pareto Gpihnal if there is no feasible contract that makes conFv\Erlers *betteroff withou

bile contracts can

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238

D. Eadey and M. O’Hara, Contracts ami asyt?met& i#ombon

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