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2021 Fiscal Year Annual Research Report

A long-term contract with a possibility of dismissal

Research Project

Project/Area Number 18K12813
Research InstitutionKobe University

Principal Investigator

佐藤 愛  神戸大学, 経済経営研究所, ジュニアリサーチフェロー (20813471)

Project Period (FY) 2018-04-01 – 2022-03-31
KeywordsDismissal contract / Long-term contract / Diversion cost
Outline of Annual Research Achievements

This article develops a multitask agency model in which the agent has to make investments for producing both contractible output and noncontractible intermediate input in a dynamic framework when the principal can fire the agent in the long-term wage contract.
The model predicts that if the diversion cost for the principal is sufficiently small, the principal prefers the long-term wage contract without firing rather than the short-term wage contract or the long-term wage contract with firing.
However, if the diversion cost for the principal becomes larger, the principal may be more likely to prefer the short-term wage contract or the long-term wage contract with firing. Furthermore, if the agent's bargaining power increases, the more likely the long-term wage contracts are chosen.

  • Research Products

    (1 results)

All 2022

All Journal Article (1 results)

  • [Journal Article] A long-term contract with a possibility of dismissal for a multitasking agent2022

    • Author(s)
      Meg Adachi-Sato
    • Journal Title

      RIEB Discussion Paper Series

      Volume: 2022-23 Pages: 1-29

URL: 

Published: 2022-12-28  

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