1.2

John is a landowner who enter a 'sharecropping' contract with Joe, a worker in the fields. In sharecropping, worker and landowner each get some fixed percentage of the output. Suppose the worker's share takes the form s(x) = a f(x) + F,where F is some constant and a<1.

Is this contract between John and Joe an example of efficient incentive contract? Explain your answer with the help of a model, arguments and equations. Give three examples of efficient contracts