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Ignorance in a multi-agent setting

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  • Pereira, Samuel C.A.

Abstract

I extend the Demski and Sappington (1984) model to the case where the agents are with some exogenous probability ignorant. I show that an ignorant agent either is not exposed to risk or he receives a lower transfer when the other agent is the informed type the principal wants to discourage choosing the contract designed for an ignorant agent.

Suggested Citation

  • Pereira, Samuel C.A., 2009. "Ignorance in a multi-agent setting," Economics Letters, Elsevier, vol. 105(3), pages 264-266, December.
    • Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:264-266
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    References listed on IDEAS

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    1. Lewis, Tracy R. & Sappington, David E. M., 1991. "All-or-nothing information control," Economics Letters, Elsevier, vol. 37(2), pages 111-113, October.
    2. Cremer, Jacques & Khalil, Fahad & Rochet, Jean-Charles, 1998. "Strategic Information Gathering before a Contract Is Offered," Journal of Economic Theory, Elsevier, vol. 81(1), pages 163-200, July.
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    Cited by:

    1. Xie, Yimei & Ding, Chuan & Li, Yang & Wang, Kaihong, 2023. "Optimal incentive contract in continuous time with different behavior relationships between agents," International Review of Financial Analysis, Elsevier, vol. 86(C).

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