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Power of an optimal incentive contract

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Reference no: EM13876362

How would the following affect agency costs and the power of an optimal incentive contract:

(a) The extent of risk aversion of the agent.

(b) The cost of effort of the agent.

(c) The greater the effect of the agent's effort on profits.

(d) The correlation between the agent's effort and the profits of the firm.

Reference no: EM13876362

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