tag:blogger.com,1999:blog-7785557572354836233.post375827276685123598..comments2014-07-31T11:10:12.121-05:00Comments on The Economics Of Organizations - Fall 2013: Video about Principal-Agent model and associated PowerpointProfessor Arvanhttp://www.blogger.com/profile/15256000730474030475noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7785557572354836233.post-44495716842820863292013-11-11T05:53:10.056-06:002013-11-11T05:53:10.056-06:00The constraints are written as inequalities. They...The constraints are written as inequalities. They are of the form <br />(IR) the expected utility of an agent taking high effort is greater than or equal to the utility of the outside option, and<br />(IC) the expected utility of an agent taking high effort is greater than or equal to the expected utility of an agent taking low effort.<br /><br />The constraint binds means that at the optimum the constraint holds as an equality.Professor Arvanhttps://www.blogger.com/profile/15256000730474030475noreply@blogger.comtag:blogger.com,1999:blog-7785557572354836233.post-73076231283696985792013-11-10T21:27:30.109-06:002013-11-10T21:27:30.109-06:00On the slides titled "Characterizing the High...On the slides titled "Characterizing the High Effort Solution" (6:25) you talk about the IR and IC constraints binding. I don't understand what it means for the constraints to bind. Can you explain this?Elinor Ostromhttps://www.blogger.com/profile/16089476997540753599noreply@blogger.com