Now, the landlords problem is

max

h,l

eH(eh+(1e)l)

such that

e=hl

c

l=lLL

where the first constraint is the tenant's ICC and the second is the limited liability constraint (LLC). Ignore the participation constraint for now. Solve the optimization problem and findh

Call ithLL

and express it in terms ofH,c,w

How much effort does the tenant put in with this contracthLL,lLL

? Call thiseLL

and express it in terms ofH,c,w