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This paper considers three-tier hierarchy including a principal who delegates both a design of public work and its verification work, an agent to whom a principal delegates the design work, and an inspector to whom a principal delegates the design verification. This paper includes two types of coalitions; one is that an agent offers a bribe to an inspector to abstain from checking the design drawing,...
This paper focuses on aseismic retrofit contracts in the principal-agent problem with ex-post unobservability in terms of the quality of the agent's work. The principal who asks for an aseismic retrofit cannot easily observe the quality of the agent's work. This ex-post unobservability can lead the agent to take opportunistic action. Hence, the principal who predicts that the agent's work will be...
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