agent's
It i
Piingquility
equalityas principal will never paymore than necessary
p w̅
I t p4 t p2 a
p i p u tptty tp tu multiply out
te cancels
F ca p
up
I add a p to both
divide.by t
T.EE pp multiply by 1
p 4 p isolate p
PNE
p
elongate
M when t.ci ERM
ER i e as ERP agentgains rent
contractual Ast ER until
completeness t 1 and agent'sER 0
, MRS
MRT
1 MRS Lp off ur r
8 I i Utility maximizing
payoff
F r expected
for C
MRI off e zdr p e Ea d Edit
MRS MRT
ri EEE a it's S
only cares about payoff
u p
2 Risk neutral
of risk o
marginal utility D
horizontal IC MRS
Not a FOC as Ur O
p er dir u er dry
e ar o
risk
e zdr r Ed level of utilitymaximizing
Ed Ed risk preference increase
p d utility maximizing
p er der e
expected payoff
It i
Piingquility
equalityas principal will never paymore than necessary
p w̅
I t p4 t p2 a
p i p u tptty tp tu multiply out
te cancels
F ca p
up
I add a p to both
divide.by t
T.EE pp multiply by 1
p 4 p isolate p
PNE
p
elongate
M when t.ci ERM
ER i e as ERP agentgains rent
contractual Ast ER until
completeness t 1 and agent'sER 0
, MRS
MRT
1 MRS Lp off ur r
8 I i Utility maximizing
payoff
F r expected
for C
MRI off e zdr p e Ea d Edit
MRS MRT
ri EEE a it's S
only cares about payoff
u p
2 Risk neutral
of risk o
marginal utility D
horizontal IC MRS
Not a FOC as Ur O
p er dir u er dry
e ar o
risk
e zdr r Ed level of utilitymaximizing
Ed Ed risk preference increase
p d utility maximizing
p er der e
expected payoff
