An Uncertain Wage Contract Model with Adverse Selection and Moral Hazard

作者：Wang Xiulan; Lan Yanfei^*; Wang Jiao

来源：Journal of Applied Mathematics, 2014, 2014: 282867.

DOI：10.1155/2014/282867

This paper considers a wage contract design problem faced by an employer (he) who employs an employee (she) to work for him in labor market. Since the employee's ability that affects the productivity is her private information and cannot be observed by the employer, it can be characterized as an uncertain variable. Moreover, the employee's effort is unobservable to the employer, and the employee can select her effort level to maximize her utility. Thus, an uncertain wage contract model with adverse selection and moral hazard is established to maximize the employer's expected profit. And the model analysis mainly focuses on the equivalent form of the proposed wage contract model and the optimal solution to this form. The optimal solution indicates that both the employee's effort level and the wage increase with the employee's ability. Lastly, a numerical example is given to illustrate the effectiveness of the proposed model.

• 出版日期2014
• 单位天津工业大学; 天津大学