Certainly, no matter whether in agriculture or industry, rented assets can be misused ; labor may shirk with respect to effort ; both effort and output may be unobservable or imperfectly measured. The relative severity of these different problems depends on both environmental conditions and the production process. Although one type of contractual arrangement may prevail over others in one production process and environment, it may not do so in others. For example , in addition to the mean value of their income streams, labor and asset owners may also value the stability of their income streams. If the insurance markets in the economy are absent or imperfect, the relevant agents will likely attach more value to risk sharing in the selection of a contract.