{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,12]],"date-time":"2025-10-12T03:56:43Z","timestamp":1760241403396,"version":"build-2065373602"},"reference-count":16,"publisher":"MDPI AG","issue":"1","license":[{"start":{"date-parts":[[2018,2,5]],"date-time":"2018-02-05T00:00:00Z","timestamp":1517788800000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Games"],"abstract":"<jats:p>One of the standard predictions of the agency theory is that more incentives can be given to agents with lower risk aversion. In this paper, we show that this relationship may be absent or reversed when the technology is endogenous and projects with a higher efficiency are also riskier. Using a modified version of the Holmstrom and Milgrom\u2019s framework, we obtain that lower agent\u2019s risk aversion unambiguously leads to higher incentives when the technology function linking efficiency and riskiness is elastic, while the risk aversion\u2013incentive relationship can be positive when this function is rigid.<\/jats:p>","DOI":"10.3390\/g9010006","type":"journal-article","created":{"date-parts":[[2018,2,5]],"date-time":"2018-02-05T04:29:42Z","timestamp":1517804982000},"page":"6","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":1,"title":["Optimal Incentives in a Principal\u2013Agent Model with Endogenous Technology"],"prefix":"10.3390","volume":"9","author":[{"ORCID":"https:\/\/orcid.org\/0000-0002-7452-614X","authenticated-orcid":false,"given":"Marco","family":"Marini","sequence":"first","affiliation":[{"name":"Department of Social and Economic Sciences, Sapienza University of Rome; Piazzale Aldo Moro 5, 00185 Rome, Italy"}]},{"given":"Paolo","family":"Polidori","sequence":"additional","affiliation":[{"name":"Department of Law, University of Urbino, Via Matteotti 1, 61029 Urbino, Italy"}]},{"given":"D\u00e9sir\u00e9e","family":"Teobaldelli","sequence":"additional","affiliation":[{"name":"Department of Law, University of Urbino, Via Matteotti 1, 61029 Urbino, Italy"}]},{"ORCID":"https:\/\/orcid.org\/0000-0003-4166-1692","authenticated-orcid":false,"given":"Davide","family":"Ticchi","sequence":"additional","affiliation":[{"name":"Department of Economics and Social Sciences, Marche Polytechnic University, Piazzale Martelli 8, 60121 Ancona, Italy"}]}],"member":"1968","published-online":{"date-parts":[[2018,2,5]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"303","DOI":"10.2307\/1913238","article-title":"Aggregation and linearity in the provision of intertemporal incentives","volume":"55","author":"Holmstrom","year":"1987","journal-title":"Econometrica"},{"key":"ref_2","doi-asserted-by":"crossref","first-page":"578","DOI":"10.1086\/259769","article-title":"Uncertainty, entrepreneurship, and sharecropping in India","volume":"79","author":"Rao","year":"1971","journal-title":"J. Polit. Econ."},{"key":"ref_3","first-page":"447","article-title":"Risk preferences and the economics of contracts","volume":"85","author":"Allen","year":"1995","journal-title":"Am. Econ. Rev."},{"key":"ref_4","doi-asserted-by":"crossref","first-page":"65","DOI":"10.1086\/250051","article-title":"The other side of the trade-off: the impact of risk on executive compensation","volume":"107","author":"Aggarwal","year":"1999","journal-title":"J. Polit. Econ."},{"key":"ref_5","doi-asserted-by":"crossref","first-page":"613","DOI":"10.1111\/1475-679X.00064","article-title":"Estimating the value of employee stock option portfolios and their sensitivities to price and volatility","volume":"40","author":"Core","year":"2002","journal-title":"J. Account. Res."},{"key":"ref_6","doi-asserted-by":"crossref","first-page":"169","DOI":"10.1111\/j.1467-6451.2007.00307.x","article-title":"Authority, risk, and performance incentives: evidence from division manager positions inside firms","volume":"55","author":"Wulf","year":"2007","journal-title":"J. Ind. Econ."},{"key":"ref_7","doi-asserted-by":"crossref","first-page":"1071","DOI":"10.1086\/341874","article-title":"The tenuous trade-off between risk and incentives","volume":"110","author":"Prendergast","year":"2002","journal-title":"J. Polit. Econ."},{"key":"ref_8","doi-asserted-by":"crossref","first-page":"209","DOI":"10.1007\/s00712-004-0085-7","article-title":"The risk and incentives trade-off in the presence of heterogeneous managers","volume":"83","author":"Wright","year":"2004","journal-title":"J. Econ."},{"key":"ref_9","doi-asserted-by":"crossref","first-page":"1073","DOI":"10.1111\/j.1468-0262.2007.00782.x","article-title":"Beauty is a beast, frog is a prince: assortative matching with nontransferabilities","volume":"75","author":"Legros","year":"2007","journal-title":"Econometrica"},{"key":"ref_10","doi-asserted-by":"crossref","first-page":"343","DOI":"10.1016\/j.econlet.2005.02.020","article-title":"Risk sharing vs. incentives: contract design under two-sided heterogeneity","volume":"88","author":"Serfes","year":"2005","journal-title":"Econ. Lett."},{"key":"ref_11","doi-asserted-by":"crossref","first-page":"587","DOI":"10.1007\/s00182-007-0109-y","article-title":"Endogenous matching in a market with heterogeneous principals and agents","volume":"36","author":"Serfes","year":"2008","journal-title":"Int. J. Game Theory"},{"key":"ref_12","doi-asserted-by":"crossref","first-page":"2","DOI":"10.1016\/j.frl.2008.12.001","article-title":"Why do reputable agents work for safer firms?","volume":"6","author":"Li","year":"2009","journal-title":"Financ. Res. Lett."},{"key":"ref_13","doi-asserted-by":"crossref","first-page":"564","DOI":"10.1086\/339712","article-title":"Endogenous matching and the empirical determinants of contract form","volume":"110","author":"Ackerberg","year":"2002","journal-title":"J. Polit. Econ."},{"key":"ref_14","doi-asserted-by":"crossref","first-page":"818","DOI":"10.1257\/00028280260344489","article-title":"Contractual structure and wealth accumulation","volume":"92","author":"Mookherjee","year":"2002","journal-title":"Am. Econ. Rev."},{"key":"ref_15","doi-asserted-by":"crossref","first-page":"89","DOI":"10.1111\/j.1430-9134.1998.00089.x","article-title":"Competition for managers and market efficiency","volume":"7","author":"Barros","year":"1998","journal-title":"J. Econ. Manag. Strategy"},{"key":"ref_16","doi-asserted-by":"crossref","unstructured":"Dam, K., and Perez-Castrillo, D. (2006). The principal-agent matching market. Front. Theor. Econ., 2.","DOI":"10.2202\/1534-5955.1257"}],"container-title":["Games"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/www.mdpi.com\/2073-4336\/9\/1\/6\/pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,11]],"date-time":"2025-10-11T14:53:47Z","timestamp":1760194427000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.mdpi.com\/2073-4336\/9\/1\/6"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2018,2,5]]},"references-count":16,"journal-issue":{"issue":"1","published-online":{"date-parts":[[2018,3]]}},"alternative-id":["g9010006"],"URL":"https:\/\/doi.org\/10.3390\/g9010006","relation":{},"ISSN":["2073-4336"],"issn-type":[{"type":"electronic","value":"2073-4336"}],"subject":[],"published":{"date-parts":[[2018,2,5]]}}}