SELLER-BROKER RELATIONSHIP AS A DOUBLE MORAL HAZARD PROBLEM

This paper studies the seller-broker relationship as a double moral hazard problem where the probability of selling the property is determined by the unobservable efforts of both the seller and the agent. The objectives of the paper are twofold. One is to examine the importance and the implications of strategic interaction between the seller's and the agent's efforts. The other is to study the efficiency and incentive effects of the percentage commission system under a general class of matching technologies, and to check whether the previous results of the literature are robust to a change in the matching technology. The analysis of the paper is also extended to the flat-fee and net listing commission systems. (C) 1995 Academic Press, Inc.