Reservation wage and optimal contract for experts

Jooyong Jun, Kyoung Soo Yoon

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the optimal contract for experts with type-dependent reservation wage. We show that Bhattacharya and Pfleiderer (1985)'s result, the possibility of achieving the truthful revelation of information with full surplus extraction, can be achieved with relaxing the restriction on the shape of reservation wage schedules. This outcome can be achieved through payoff functions that are affine in a convex transformation of the ex-post error. Our result is applied to the case of multiple experts.

Original languageEnglish
Pages (from-to)619-623
Number of pages5
JournalEconomics Letters
Volume117
Issue number3
DOIs
StatePublished - 2012

Keywords

  • Contract
  • Reservation wage
  • Type-dependence

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