Optimal contracts boost project success despite risk-averse agents, study finds.
The article explores how a boss can create the best contract for a cautious worker in a risky situation. When the worker's skills and actions can boost project success, the boss can increase success chances by offering a special contract, even if it costs extra. However, there may be some unfairness at the top. It's tricky to design contracts that avoid treating all workers the same, due to balancing the need for fair pay, protection, and efficiency.