{"title":"Error Noted in “Robust Contract Designs: Linear Contracts and Moral Hazard” by Yu and Kong (2020)","authors":"Jingyuan Yang, Linwei Xin","doi":"10.2139/ssrn.3895883","DOIUrl":null,"url":null,"abstract":"One of the main results of “Robust Contract Designs: Linear Contracts and Moral Hazard” by Yu and Kong (2020) is Proposition 4, which states that the optimal robust contract with a piecewise linear concave agent utility only consists of progressive fixed payments and linear rewards with progressive commission rates. In this note, we construct a counterexample showing that this result is wrong.","PeriodicalId":285784,"journal":{"name":"ERN: Economics of Contract: Theory (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2021-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ERN: Economics of Contract: Theory (Topic)","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.3895883","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
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Abstract
One of the main results of “Robust Contract Designs: Linear Contracts and Moral Hazard” by Yu and Kong (2020) is Proposition 4, which states that the optimal robust contract with a piecewise linear concave agent utility only consists of progressive fixed payments and linear rewards with progressive commission rates. In this note, we construct a counterexample showing that this result is wrong.
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