%0 Journal Article %T On the Consistency of the First-Order-Approach to Principal-Agent Problems %A ¨®scar Guti¨¦rrez %J Theoretical Economics Letters %P 157-161 %@ 2162-2086 %D 2012 %I Scientific Research Publishing %R 10.4236/tel.2012.22028 %X This paper revisits the principal-agent model with moral hazard when its solution is obtained invoking the first-order-approach. We show that the solution can be economically inconsistent even when ˇ°sufficient conditionsˇ± ensuring its validity ([1,2]) hold. To be more precise, we provide examples where is impossible to find Lagrange multipliers validating the approach. The correct solution to the problem provides a rationale for option-like contracts and minimum payments. %K Moral Hazard %K Principal-Agent Model %K First-Order Approach %K Likelihood Ratio %K Option-Like Incentives. %U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=19287