Glossary of economics research
Results of search for IR constraint follow:
IR constraint:
IR stands for "individually rational".
When solving a principal-agent maximization problem for a contract that meets
various criteria, the IR constraints are those that require agents to prefer
to sign the contract than not to. If the IR constraint were not imposed, the
solution to the problem might be economically meaningless, insofar as it was a
contract that met some criterion of optimality but which an agent would refuse
to sign.
See also IC constraint.
Contexts: models; micro theory; principal-agent problems
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