Profit-Sharing Arrangements in a Team and the Cost of Information
Journal
Taiwan Economic Review
Type
journal article
Date Issued
1988-03-01
Author(s)
Abstract
The LEN-Model (referring to "linear functions", "exponential utility" and "normal distribution" as major properties of the LEN-Model) allows to study profit-sharing agreements in a team of principal and agent. First, this article describes and analyses the LEN-Model again (which was originally presented in 1987 by the same author). Second, agency costs are identified and calculated. Agency costs in a principal-agent relationship are seen as an information value. The question behind the nature of agency costs is: how much would principal and agent be willing to pay to overcome the disadvantages of asymmetric information they have in their relationship. The answer is given by the information value.
Language
English
HSG Classification
not classified
Refereed
No
Volume
16
Number
1
Start page
41
End page
57
Pages
17
Subject(s)
Division(s)
Eprints ID
31928
File(s)![Thumbnail Image]()
Name
Klaus Spremann.pdf
Size
8.69 MB
Format
Adobe PDF
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