Contracts and asymmetric information in the theory of the firm

at Cornell, the University of Rochester, and the Public Choice Society Meetings, Spring 1985. 0167-268 l/88/$3.50 @ 1988, Elsevier Science Pubhshers

230

D. Easfeymd M. O’Hara, Contracts ad

asymnaetric iq?imwtion in tkfinn

between a firm’s managers and its owners [see Jensen and eckling (1976)3. Otis literature looks at the related questions r;f rkk-zhating and incentive between input owners (labor and capital) and

t firms are ObvicMl profits are constrai

D. Easley

whole (buyers and the manager) is to select an op allocation mechanism) sub@ to the constraint th consumers and et,consumers a

and Jensen (1983).

D. Eusky

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234

D. Easiey and M. O’Hma, Contracts ad asynmetric iajbmwtion in the_&

That is, a contract is Pareto Gpihnal if there is no feasible contract that makes conFv\Erlers *betteroff withou

bile contracts can

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attainable thou relative to the

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(7)

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238

D. Eadey and M. O’Hara, Contracts ami asyt?met& i#ombon

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