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Kraft, H., Reichling, P. Prinzipal-Agent-Beziehung: First-best, second-best und third-best. Credit and Capital Markets – Kredit und Kapital, 33(2), 151-181.
Kraft, Holger and Reichling, Peter "Prinzipal-Agent-Beziehung: First-best, second-best und third-best" Credit and Capital Markets – Kredit und Kapital 33.2, 2000, 151-181.
Kraft, Holger/Reichling, Peter (2000): Prinzipal-Agent-Beziehung: First-best, second-best und third-best, in: Credit and Capital Markets – Kredit und Kapital, vol. 33, iss. 2, 151-181, [online]


Prinzipal-Agent-Beziehung: First-best, second-best und third-best

Kraft, Holger | Reichling, Peter

Credit and Capital Markets – Kredit und Kapital, Vol. 33 (2000), Iss. 2 : pp. 151–181

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Holger Kraft, Mainz

Peter Reichling, Magdeburg


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Relationship between Principal and Agent: First-best, Second-best and Third-best

This contribution discusses in discret language the classical relationship between principal and agent. It focuses on the pay-scale monotony. One of this contribution’s aims is to give a synopsis of the conditions that would ensure pay rises in second-best cases. The fact that the discussion focuses on risk-neutral principals only permits the general statement that second-best pay-scales either remain constant or point upward in at least one respect. This explains why second-best pay-scales dropping section-wise are characteristic of certain situations.

Where second-best pay-scales dropping section-wise are not permissible (thirdbest cases) the result is a loss in prosperity on account of the fact that any artificial pay-scale monotonisation reduces its stimulating effect. Moreover, the salaries principals pay their agents tend to be on the high side in the case of major backflows