Moral hazard and bargaining power

Demougin, D and Helm, C (2006) Moral hazard and bargaining power German Economic Review, 7 (4). pp. 463-470. ISSN 1465-6485, 1468-0475

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Abstract

We introduce bargaining power in a moral hazard framework where parties are risk-neutral and the agent is financially constrained. We show that the same contract emerges if the concept of bargaining power is analyzed in either of the following three frameworks: in a standard principal-agent (P-A) framework by varying the agent's outside opportunity, in an alternating offer game, and in a generalized Nash-bargaining game. However, for sufficiently low levels of the agent's bargaining power, increasing it marginally does affect the equilibrium in the Nash-bargaining game, but not in the P-A model and in the alternating offer game. © Verein für Socialpolitik and Blackwell Publishing Ltd. 2006.

Item Type:	Article
Uncontrolled Keywords:	38 Economics, 3801 Applied Economics, 3803 Economic Theory
Depositing User:	Symplectic Admin
Date Deposited:	15 Aug 2016 10:06
Last Modified:	23 May 2026 00:19
DOI:	10.1111/j.1468-0475.2006.00130.x
Related Websites:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3002931
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