Contracts of risk sharing of the enterprise, the employee and the dealer
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Abstract:
The output of the enterprise changes with the change of natural states, therefore it brings relatively great risk to enterprise. The enterprise hopes to reduce the same kind of risk through more contracts than one kind of contract of risk sharing. This paper presents a new method to disperse the same kind of risk in two kinds of ways. Basing on principal-agent theory, through the optimum contract of risk sharing, the Pareto-optimum solving is solved-the optimum contract of risk sharing. The employee shares some risks through the optimum contract of risk sharing between the enterprise and the employee-when the output is high, the employee's income increases; when the output is low, the income decreases. In order to reduce the risk of the enterprise further, the dealer also shares the risk. To maximize the utility of the enterprise, the Pareto optimum solving is given-another optimum contract of risk. The dealer offers following contract of risk sharing to the enterprise-when the output is high, the dealer receives the repayment; when the output is low, the enterprise is compensated. The enterprise, the employee and the dealer share the risk together, thus the risk of the enterprise is reduced to relatively great degree.
