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Unformatted text preview: p on output and the tenants payoff an increase in p will increase net-output since e ( p ) is increasing. The effect on the tenants payoff is given by: V ( p ) = e ( p ) 1 p p e ( p ) p 1 p 2 P the Frst term is positive an increase in the eviction probability elicits higher effort and hence raises the tenants rent. The second effect works in the opposite direction increasing p will decrease rent accruing to tenant at a given level of effort hence expect overall payoff to be increasing in p Development Economics, LSE Summer School 2007 106...
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- Spring '10