A constraint in a contract, which ensures the agent is better off taking the contract and joining the firm rather than not, is called the participation constraint.

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The participation constraint is a key element of contract theory, and it is designed to ensure that the agent has an incentive to accept the contract and work for the firm rather than pursuing other options. By providing the agent with sufficient compensation and benefits, the participation constraint can encourage the agent to remain committed to the contract and to work diligently to achieve the company's goals. Overall, the participation constraint is a critical element of any effective contract, and it can help to ensure that both the agent and the firm are able to thrive and achieve their objectives.

A Constraint in a Contract, Which Ensures the Agent Is