Unformatted text preview: p on output and the tenant’s payoff – an increase in p will increase net-output since e ( p ) is increasing. The effect on the tenant’s 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 tenant’s 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
- landlord, Leasehold estate, Besley & Burgess