Ghatak, Maitreesh 
ORCID: 0000-0002-0126-0897
(2000)
Contract choice in agriculture with joint moral hazard in effort and risk.
Journal of Development Economics, 63 (2).
pp. 303-326.
ISSN 0304-3878
Abstract
We analyze optimal contract choice in agriculture when there is joint moral hazard on the part of the farmer in the supply of effort and the riskiness of the technique of cultivation. In the presence of limited liability, high-powered incentive contracts such as fixed rental contracts will induce the farmer to adopt techniques of cultivation that are too risky from the point of view of the landlord. On the other hand, low-powered incentive contracts such as fixed wage contracts will induce the farmer to supply too little effort. We show that sharecropping contracts emerge as a natural solution to balance these two conflicting considerations.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.elsevier.com/wps/find/journaldescriptio... |
| Additional Information: | © 2000 Elsevier Science B.V. |
| Divisions: | Economics STICERD |
| Subjects: | H Social Sciences > HB Economic Theory S Agriculture > S Agriculture (General) |
| JEL classification: | D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q15 - Land Ownership and Tenure; Land Reform; Land Use; Irrigation |
| Date Deposited: | 14 Apr 2011 09:49 |
| Last Modified: | 01 Apr 2024 08:12 |
| URI: | http://eprints.lse.ac.uk/id/eprint/35609 |
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