Year: 1978
Type: article
Abstract: In a two-agent setting, one agent ("landlord") seeks to maximize his residual gain, i.e., that part of output remaining after payment of a reward to the other agent ("worker"). The reward must be a function of the worker's output since his effort cannot be directly observed, and the landlord must choose this function without knowing the worker's disutility and productivity parameters. A 50-50 split turns out to be the maximin (regret) solution in a broad class of cases, even if discontinuous reward functions are permitted. This "sharecropping" model suggests itself in problems where the first agent represents the government and the residual gain serves a paramount national or social objective.
Source: The Bell Journal of Economics
DOI: 10.2307/3003619
Authors: Leonid Hurwicz, Leonard Shapiro
Institution: University of Minnesota
Language: English
Topic: Game Theory and Applications
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
Funder: National Science Foundation
OpenAlex ID: W1510350274