Study on the Contract in Delegated Portfolio Management When the Manager Possesses Market Power
管理者具有市场能力的委托组合投资管理合同研究

We study the incentive of a linear contract in the delegated portfolio management when the manager possesses market power.A linear contract provides incentives to the manager to work at acquiring information when the manager possesses market power,which affects the equilibrium price of securities in the market.Our conclusion is different to the exiting studies.The optimal effort is an increase function of the ratio of risk sharing to a risk-averse manager.Linear contract not only can make the optimal risk allocation between the investor and the manager,also incentive the manager to work hard.