성공보수와 쌍방대리인 콘테스트

Abstract

The primary goal of this paper is to show that the variation in risk aversion plays a key role in the bilateral-delegation contests. We first characterize the comparative statics of the two-period game in which the delegates of risk-averse players work on a pure contingent fee. We show that the more risk-averse player offers the larger contingent fee, thus raising his delegate’s effort level. We also show that the more risk-averse player has a higher-than-50 percent chance of winning. We next consider the case where the players recognize the delegates' non-negative reservation wages. Assuming equal degree of risk-aversion for the players and identical magnitude of reservation wages for the delegates, it is shown that a higher degree of risk-aversion results in overcompensation to the delegates when the delegates' reservation wages are sufficiently low.