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2
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1answer
198 views

Question on uncertainity

Please imagine that Nicole is uncertain of her future wealth. Her wealth in the bad state of the world is zero. Her wealth in the good state is $w>0$. Each state is initially equally likely. ...
0
votes
0answers
57 views

Effort and conditional probability

I am trying to model a continuous conditional probability of success for a task with respect to the effort made. I expect the following properties: $e\in[0; 1]\quad \text{the effort}$ $x\in[0; 1]\...
3
votes
3answers
321 views

What are some good books and articles about the principal-agent problem?

What are some good books and articles about the principal-agent problem? I'm looking for introductory academic books/articles or "popular-science" kind of ones.
5
votes
0answers
62 views

Principal's beliefs in a repeated moral hazard problem

I have a question about models of repeated principal-agent models. There is this famous piece by Bengt Holmstrom: Moral hazard and observability, 1979, The Bell Journal of Economics. It presents the ...
1
vote
0answers
114 views

Estimate the Utility function for the Principal-Agent problem (real case)

I have a company and I have to set the wage to my employer based on different levels of revenues. Examples W_1 if Revenue = 100k ...
2
votes
1answer
159 views

difference between screening game and moral hazard game

What is the difference between screening game and moral hazard game? I know that in screening game, TYPE is not known by the principal, while in moral hazard game, EFFORT is not observed by the ...
1
vote
1answer
701 views

Binding constraints at second-best optimum

I am dealing with ex-ante asymmetric information problems, i.e. adverse selection and in particular I cannot understand what's the intuition behind the fact that only two out of four constraints ...
8
votes
0answers
237 views

LEN-Model equivalency

Starting position is a principal-agent-model with incomplete information (moral hazard) and the following properties: Agent utility: $u(z)=-e^{(-r_az)}$ Principal utility: $B(z)=-e^{(-r_pz)}$ Effort ...
8
votes
2answers
434 views

Moral Hazard with risk neutral agent

We have a principal-agent model with hidden actions in which the principal is risk averse and the agent is risk neutral; Assume also there are two levels of output, $x$ and $x'$ (with $x'>x$) and ...
0
votes
1answer
91 views

Principal Agent Question Private Benefit

If an agent can take action which impacts social welfare in a noisy way, the private net benefit of the action is $P(x,t)=x-s(\frac{x^2}{2} + t)$, $s$ is $(0,1)$ How can I determine the privately ...
0
votes
0answers
186 views

Principal agent question

Principal is interested in buying lake. The revenues of operating the lake as a camping site are determined by the weather (a random parameter $w$ distributed uniformly on $[0, 1]$) and by the ...
3
votes
1answer
60 views

Delegation with Discreteness

Consider a game of delegation. An uninformed principal must delegate some task to an informed agent with preferences imperfectly aligned. I'm aware of plenty of literature that studies these kinds of ...