Structuring contracts to share risk in light of incentiove problems is the central premise of contract theory , yet the risk sharing implications have rarely been thoroughly tested using micro-leve contract data. In this article we test the major implication of a principal-agent model of contracts using detailed data on more than 400 individual contracts from modern North American Agriculture. On a case-by-case basis, our evidence fails to support the standard principal-agent model with risk aversion as an explanation of contract choice in modern North America Farming. At the same time, we find some support for models that assume risk-neutral contracting parties and stress multiple margins for moral hazard and enforcement costs
