Principal-Agent Model under Irrational Psychology of Agent

The behavioral economics indicates that people are not only pursuing their private profits but also pursue irrational psychology such as fairness and reciprocity which influencing the people's behavior.Based on the social preference theory and the utility model,this paper changes the hypothetical precondition of conventional principal-agent model,discusses a new principal-agent model which agent concerning about others' well-being and motivation and showing different kinds of irrational psychology.The results show that the irrational psychology has crucial influence on the contract structure and the incentive efficiency and profit of principal.The behavior of irrational agent is more complex and he will seek balance between irrational psychology and self-interest.