Publication detail

Principal-agent Problem in the Context of the Economic Survival

Author(s): prof. RNDr. Jiří Hlaváček CSc., Hlaváček M.
Type: Articles in refereed journals
Year: 2006
Number: 3
ISSN / ISBN: 0572-3043
Published in: Acta Oeconomica Pragensia 2006/3
Publishing place: Praha
Keywords: moral hazard; adverse selection; probability of survival, Pareto distribution of probability
JEL codes: D82
Suggested Citation:
Grants: IES Research Framework Institutional task (2005-2011) Integration of the Czech economy into European union and its development
Abstract: The paper analyses problems within the asymmetric information models (principal agent models) where we replace standard assumption of maximisation of expected income by maximisation of probability of economic survival. This paper concentrates on two basic models – adverse selection model and moral hazard model. In both cases the effect of asymmetry of information gets weaker or even disappears. Contrary to standard approach the competitive Pareto effective equilibrium could exists in both models with pooled contract with full coverage of possible accident by the principal.




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