A simple principal-agent experiment for the classroom

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Abstract

In this note we describe a simple, flexible and instructive moral hazard experiment. It can be used in a variety of classes, including principles classes, to illustrate the basic incentive conflicts in principal-agent interactions, the importance of information, and the power of reputational enforcement. (JEL A2, C7).

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Ortmann, A., & Colander, D. (1997). A simple principal-agent experiment for the classroom. Economic Inquiry, 35(2), 443–450. https://doi.org/10.1111/j.1465-7295.1997.tb01921.x

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