Abstract
This research investigates the wage schedule of a manager in an insurance firm when the manager is risk averse, using a principalagent framework. The results of this research are as follows. In the case of a monopoly market, a perfectly fixed wage is submitted. In contrast, when the market includes more than one insurance firm, a perfectly fixed wage is not the equilibrium. In addition, this research derives the result that when the number of insurance firms is relatively small, if the number of insurance firms increases, the weight of a performance-based wage rises. In contrast, when the number of insurance firms is relatively large, even if the number of insurance firms increases, the weight of a performance-based wage may remain constant.
