  Limited memory of decision-makers is often neglected in economic models,
although it is reasonable to assume that it significantly influences the
models' outcomes. The hidden-action model introduced by Holmstr\"om also
includes this assumption. In delegation relationships between a principal and
an agent, this model provides the optimal sharing rule for the outcome that
optimizes both parties' utilities. This paper introduces an agent-based model
of the hidden-action problem that includes limitations in the cognitive
capacity of contracting parties. Our analysis mainly focuses on the sensitivity
of the principal's and the agent's utilities to the relaxed assumptions. The
results indicate that the agent's utility drops with limitations in the
principal's cognitive capacity. Also, we find that the agent's cognitive
capacity limitations affect neither his nor the principal's utility. Thus, the
agent bears all adverse effects resulting from limitations in cognitive
capacity.
