Abstract
An explanation is provided for two observations concerning variations in the choice of tenants and their welfare. Differences in tenants' wealth imply corresponding differences in liability when default is possible on fixed rental commitments. In this context, the inability of landlords to specify their tenants' effort lead to effort choices that vary with the type of contract offered. The selection of tenants and the contract terms they receive thus depend on wealth with wealthier tenants being preferred and receiving fixed rent contracts. These results also predict that wealthier tenants earn higher profits on their leased plots.
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