Labor Contracts With Two-Dimensional Adverse Selection
Carlier, Guillaume; Gaumont, Damien (2000), Labor Contracts With Two-Dimensional Adverse Selection. https://basepub.dauphine.fr/handle/123456789/6245
TypeDocument de travail / Working paper
Series titleCahiers du CEREMADE
MetadataShow full item record
Abstract (EN)We study incentive-compatible labor contracts in the case where both individual productivity and subjective discount rate are unobservable by the rm. We rst show that unidimensional manifolds of agents group on the same contract. High , low agents may choose the same contract as low , high agents. We show existence and uniqueness of an optimal wage function which is continuous and unbounded. This optimal wage function can be determined by the ironing procedure.
Subjects / KeywordsAdverse Selection; Incentive-Compatible Contracts; Ironing Procedure; Heterogeneous Time Preference
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