Weban undersupply of labour (effort) as a result of a sharecropping system. On the other hand, if effort (labour supply) cannot be easily observed, then share-cropping has an important positive incentive effect. If the landlord were risk neutral, and if there were no incentive … WebMy perspective on risk in incentive contracting is nicely illustrated by work on sharecropping. The economic historians Lee Alston and Robert Higgs analyze three standard sharecropping contracts: wage labor, which imposes no risk on the agent (b Å 0); crop sharing, which shares risk between the principal and the agent
The benefits and challenges of employee share incentives
WebStiglitz provides one answer: trade-o↵ between incentives and risk-sharing Overview of model: Farming is risky – output is uncertain (e.g., pests, weather, etc). Risk averse agents prefer to be insured against this risk ... to engage in sharecropping to share risk, even if it lowers production due to moral hazard Stiglitz (1974) shows that ... WebJan 1, 2015 · In spite of its apparent inefficiency, sharecropping has prevailed over the years. Several economic theories have been put forward to explain its existence. It has been argued that sharecropping can be explained as a compromise between risk sharing and provision of incentives (Stiglitz 1974; Newbery 1977; Newbery and Stiglitz 1979 ). smackdown en
Incentives in Organizations - American Economic Association
WebThe article begins by discussing the frictions that lie at the heart of incentive problems. Next, the principal's optimal response to these frictions is explored, taking as given the characteristics of the agents with whom the principal interacts in a nonrepeated setting. WebCOST SHARING ARRANGEMENTS UNDER SHARECROPPING: MORAL HAZARD, INCENTIVE FLEXIBILITY AND RISK by Avishay Braverman and Joseph E. Stiglitz October 1985 The authors are Senior Economist at the Agriculture and Rural Development Department of the World Bank and Professor at Princeton University, respectively. WebMy perspective on risk in incentive contracting is nicely illustrated by work on sharecropping. The economic historians Lee Alston and Robert Higgs analyze three … sold maclean