Agent or Borrower? An Incentive of Moral Hazard with China Commercial Guarantee Company

Table 5

Payoff structure of guarantee company’s choice.

	Success (𝑝𝐵)	Fail (1−𝑝𝐵)
Agent	𝐿𝑔	𝑅+𝐶+𝐿𝑔−𝐿(1+𝑖)
Borrower	𝐿𝑔+[𝑝𝑔𝐿1𝑟1+(1−𝑝𝑔)(−𝐿1)]	𝑅+𝐶+𝐿𝑔+𝐿1+[𝑝𝑔𝐿1𝑟1+(1−𝑝𝑔)(−𝐿1)]−𝐿(1+𝑖)