{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,17]],"date-time":"2025-10-17T19:57:08Z","timestamp":1760731028138,"version":"build-2065373602"},"reference-count":14,"publisher":"MDPI AG","issue":"1","license":[{"start":{"date-parts":[[2018,3,1]],"date-time":"2018-03-01T00:00:00Z","timestamp":1519862400000},"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>This paper studies the optimal contract offered by a risk-neutral principal to a risk-averse agent when the agent\u2019s hidden ability and action both improve the probability of the project being successful. We show that if the agent is sufficiently prudent and able, the principal induces a higher probability of success than under moral hazard, despite the costly informational rent given up. Moreover, there is distortion at the top. Finally, the conditions to avoid pooling are difficult to satisfy because of the different kinds of incentives to be managed and the overall trade-off between rent extraction, insurance, and efficiency involved.<\/jats:p>","DOI":"10.3390\/g9010012","type":"journal-article","created":{"date-parts":[[2018,3,1]],"date-time":"2018-03-01T12:15:44Z","timestamp":1519906544000},"page":"12","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":4,"title":["The Optimal Contract under Adverse Selection in a Moral-Hazard Model with a Risk-Averse Agent"],"prefix":"10.3390","volume":"9","author":[{"given":"Fran\u00e7ois","family":"Mar\u00e9chal","sequence":"first","affiliation":[{"name":"CRESE EA3190, University Bourgogne Franche-Comt\u00e9, F-25000 Besan\u00e7on, France"}]},{"given":"Lionel","family":"Thomas","sequence":"additional","affiliation":[{"name":"CRESE EA3190, University Bourgogne Franche-Comt\u00e9, F-25000 Besan\u00e7on, France"}]}],"member":"1968","published-online":{"date-parts":[[2018,3,1]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","unstructured":"Laffont, J.-J., and Martimort, D. 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Theory"},{"key":"ref_10","doi-asserted-by":"crossref","first-page":"192","DOI":"10.1016\/j.ijindorg.2017.07.002","article-title":"Motivating with simple contracts","volume":"54","author":"Escobar","year":"2017","journal-title":"Int. J. Ind. Organ."},{"key":"ref_11","doi-asserted-by":"crossref","first-page":"151","DOI":"10.1007\/s00199-005-0040-z","article-title":"Screening risk-averse agents under moral-hazard: single-crossing and the CARA case","volume":"30","author":"Jullien","year":"2007","journal-title":"Econ. Theory"},{"key":"ref_12","doi-asserted-by":"crossref","first-page":"614","DOI":"10.1086\/261392","article-title":"Using cost observation to regulate firms","volume":"94","author":"Laffont","year":"1986","journal-title":"J. Political Econ."},{"key":"ref_13","doi-asserted-by":"crossref","first-page":"67","DOI":"10.1016\/0304-4068(82)90006-4","article-title":"Optimal coordination mechanisms in generalized principal-agent problems","volume":"10","author":"Myerson","year":"1982","journal-title":"J. Math. Econ."},{"key":"ref_14","unstructured":"Seierstad, A., and Syds\u00e6ter, K. (1987). Optimal Control Theory with Economic Applications, North-Holland."}],"container-title":["Games"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/www.mdpi.com\/2073-4336\/9\/1\/12\/pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,11]],"date-time":"2025-10-11T14:57:04Z","timestamp":1760194624000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.mdpi.com\/2073-4336\/9\/1\/12"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2018,3,1]]},"references-count":14,"journal-issue":{"issue":"1","published-online":{"date-parts":[[2018,3]]}},"alternative-id":["g9010012"],"URL":"https:\/\/doi.org\/10.3390\/g9010012","relation":{},"ISSN":["2073-4336"],"issn-type":[{"type":"electronic","value":"2073-4336"}],"subject":[],"published":{"date-parts":[[2018,3,1]]}}}