  In a continuous-time setting where a risk-averse agent controls the drift of
an output process driven by a Brownian motion, optimal contracts are linear in
the terminal output; this result is well-known in a setting with moral hazard
and -under stronger assumptions - adverse selection. We show that this result
continues to hold when in addition reservation utilities are type-dependent.
This type of problem occurs in the study of optimal compensation problems
involving competing principals.
