Renegotiating moral hazard contracts under limited liability and monotonicity (Q5937314)

This is a new transdisciplinary study concerning the renegotiating moral hazard contracts, being based on the corresponding natural limited liability and monotonicity. The usual Pareto efficiency and the afferent equilibrium in Euclidean spaces is used in order to show that any nondebt initial contract is weakly Pareto dominated by a debt contract, giving the agent optimal renegotiation game. The paper contains also Edgeworth's Box and First-Order's Approach pertinent examples, the importance of random contracts, the generalized renegotiation game and significant references.