Paper Info
Title
Holmstrom-Milgrom Model of Principal-Agent Based on Cobb-Douglas Function
Abstract
Based on the generalized model of principal-agent theory, the Holmstrom-Milgrom Model is pre-digested, which is adopted mostly in literatures. However, the model assumes that the production function is linear, and the model doesn't consider the ability level of agent, except for the effort level. This paper incorporates the ability level of the agent into the Holmstrom-Milgrom Model, constructing and analyzing a new model by mathematical approach based on the Cobb-Dauglas production function. The results suggest the degree of effort level of the agent has increased, and the cost of risk has decreased in the new model. Simultaneously, the expected income of the principal has improved. The new model has more interpreting meaning as a Pareto-improvement.
Year
DOI
Venue
2013
10.1109/BIFE.2013.90
BIFE
Keywords
Field
DocType
optimisation,pareto-improvement,principal-agent theory,optimization problems,holmstrom-milgrom model,mathematical approach,cobb-dauglas function,economics,cobb-dauglas production function,cobb-dauglas function, principal-agent theory, holmstrom-milgrom model, pareto-improvement
Production function,Econometrics,Economics,Mathematical economics,CobB,Principal–agent problem
Conference
ISSN
ISBN
Citations 
2372-1723
978-1-4799-4778-2
0
PageRank 
References 
Authors
0.34
0
1
Name
Order
Citations
PageRank
Jingwei Liu12010.65