Principal Agent Models Part 1: Moral Hazard with Observability

In part one, we look at a model with the potential for Moral Hazard (Hidden Actions) that might hurt the Principal), but first assume that you can observe the effort of the agent. In the next video, we will assume that the agent's actions are hidden, but output is not-- solving the true moral hazard problem for the optimal contract.
Link to Download Handout: drive.google.com/file/d/0B3-F...
Link to Video on Risk Aversion & Uncertainty: • Risk Aversion and Expe...
Link to Video 2: What if Effort is not Observable? • Principal Agent Models...
Link to my Uncertainty Playlist: • Risk Aversion and Expe...
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[@mohammedmahinuralam2796]

Clear and simple explanations. Thanks a lot for sharing the video.

[@mrbinhesam]

Great and amazing video, I finally could understand what is going on.

[@dainerystargaryen]

Thank you so much for such a clear explanation!​

[@ChopperEnco10]

This is quite fantastic. Thank you good sir!

[@lauga097]

Great video! Thank you so much!

[@zbellucf]

Thank you, thank you, thank you!

[@timothyg9969]

Thank u so much!

[@haggaisimon7748]

It's incentive compatibility constraint instead of ind. rationality. IR constraint is the same as participation constraint. Also I think Fudenberg Tirole repeated the process in their book Game theory, am I right?

[@florencezimba9263]

Thank you sire

[@meem524]

Hi. Can you share what the profit funtion will be in this case? For the different values of effort

[@amiteshsrivastava615]

Sir can you please explain this problem through optimal control theory or can you provide the solution of this problem through optimal control theory.

[@user-pj4cz1dw7s]

Thank you for your clear teaching. But your handout is no longer available. How could I get it?

[@BurkeyAcademy]

Thanks for asking- Google screwed up hundreds of my links- I updated it in the video description.