A class of games of imperfect information in which one player (the principal) attempts to
offer incentives to the other (the agent) to encourage the agent to act in the principal's best interest.
Often, such incentives are given to overcome the moral hazard problem in which the agent has inadequate incentives to perform.
updated: 15 August 2005
HOW TO CITE THIS ENTRY
- To learn more:
- See news articles on moral hazard.