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This paper extends the standard principal-agent model with moral hazard to allow for agents having reference-dependent preferences according to Koszegi and Rabin (2006, 2007). When loss aversion is the predominant determinant of the agent's risk preferences, the principal optimally offers a simple bonus contract, i.e., when the agent's performance exceeds a certain threshold, he receives a fixed bonus payment. Also when risk aversion becomes more important, the optimal contract displays less complexity than predicted by orthodox theory. Thus, loss aversion introduces an endogenous complexity cost into contracting.