SFB 303 Discussion Paper No. A - 187
Author: Jost, Peter-Jürgen
Title: A Generalization of the Principal-Agent Framework
Abstract: We examine a principal-agent relationship in which the principal has the option to invest resources into
controlling the agent's behavior. Thus, the principal will trade off the costs and benefits of the additional
information provided by his observation. Throughout this paper we assume that the principal can precommit
himself on control at the time of contracting. Under this assumption we focus on the effect of control on risk
sharing between the two parties.
Creation-Date: July 1988
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