An Analysis Of Principal-agent Model In The Incentive Mechanism Of Insurance Agent

The principal-agent theory is a content of information economics, which has been applied abroad such as in the field of system research, insurance, management and so on. It attempts to model a kind of problem such as a principal expects the agents choose activity in the light of the former profit, but the principal can not observe directly which activity the agents choose, what he can observe is only another variable which is determined by the activity of agents and other outside random variable, and it is imperfectness information of agents'activity. The problem of principal is how to award or punish the agents according as the information observed, in order to incentive the agents choose the most available activity for the principal.Companies of insurance have made great progress recently, and most of them run mainly by agent mode. It is an important part of the management system of insurance agent that insurance company manages the insurance agents. It is significative to analyses the principal how to design incentive contract based on the fact to optimize the profit of insurance.This paper attempts to analyses the optimum incentive contract using the theory of principal-agent of economics information on the point of qualitative and quantitative view under the condition of moral hazard and adverse selection, it is available to decrease the moral hazard problem of incentive contract considering relative performance, there is reputation effect in the two-period dynamic moral hazard model obviously. Given an adverse selection problem, the only efficient contract is that designed for the most efficient agent and a distortion is introduced into the efficiency condition of less efficient agent, therefore the insurance loses efficiency with respect to less efficient agent, but pay less informational rent to the most efficient agent. There is more informational rent and less effort in the compound model of moral hazard and adverse selection compare to the only adverse selection, tests it is nash equilibrium when the principal and agent both show real typies, and then extends the model and designs the other incentive mechanism to eliminate the inferior equilibrium, in order to give method direction and theoretic basis on the design of incentive mechanism of insurance agent in practice.