Moral Hazard and Other-Regarding Preferences

• Published in: Japanese economic review (Oxford, England) Vol. 55; no. 1; pp. 18 - 45
• Main Author: Itoh, Hideshi
• Format: Journal Article
• Language: English
• Published: Oxford, UK Blackwell Publishing Ltd 01.03.2004; Japanese Economic Association; Springer Nature B.V
• Series: The Japanese Economic Review
• Subjects: Economic models; Economic theory; Moral hazard; Organizations; Preferences; Principal-agent theory; Studies; Well-being

The paper aims at obtaining new theoretical insights by combining the standard moral hazard models of principal–agent relationships with theories of other‐regarding preferences, in particular inequity aversion theory. The principal is in general worse off, as the agent cares more about the wellbeing...