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Ignorance in a multi-agent setting

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  • Pereira, Samuel C.A.
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    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.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-4X4GHP7-1/2/ba92aa87af89d55078056dee54779508
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 105 (2009)
    Issue (Month): 3 (December)
    Pages: 264-266

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    Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:264-266

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Adverse selection Multi-agent contracts Information acquisition Mechanism design;

    References

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    1. Cremer, J. & Khalil, F. & Rochet, J-C., 1997. "Contracts and productive information gathering," Discussion Paper Series In Economics And Econometrics 9707, Economics Division, School of Social Sciences, University of Southampton.
    2. Anke Kessler, 1998. "The Value of Ignorance," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 339-354, Summer.
    3. Sappington, David & Demski, Joel S., 1983. "Multi-agent control in perfectly correlated environments," Economics Letters, Elsevier, vol. 13(4), pages 325-330.
    4. Mookherjee, Dilip & Reichelstein, Stefan, 1990. "Implementation via Augmented Revelation Mechanisms," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 453-75, July.
    5. Cremer, J. & Khalil, F. & Rochet, J.-C., 1997. "Strategic information gathering before a contract is offered," Discussion Paper Series In Economics And Econometrics 9708, Economics Division, School of Social Sciences, University of Southampton.
    6. Demski, Joel S. & Sappington, David, 1984. "Optimal incentive contracts with multiple agents," Journal of Economic Theory, Elsevier, vol. 33(1), pages 152-171, June.
    7. Mookherjee, Dilip, 1984. "Optimal Incentive Schemes with Many Agents," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 433-46, July.
    8. Arya, A. & Glover, J. & Rajan, U., 1999. "Implementation in Principal-Agent Models of Adverse Selection," GSIA Working Papers 1999-8, Carnegie Mellon University, Tepper School of Business.
    9. Dasgupta, Partha S & Hammond, Peter J & Maskin, Eric S, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 185-216, April.
    10. Ma, Ching-to & Moore, John & Turnbull, Stephen, 1988. "Stopping agents from "cheating"," Journal of Economic Theory, Elsevier, vol. 46(2), pages 355-372, December.
    11. Lewis, Tracy R. & Sappington, David E. M., 1991. "All-or-nothing information control," Economics Letters, Elsevier, vol. 37(2), pages 111-113, October.
    12. Lewis Tracy R. & Sappington David E. M., 1993. "Ignorance in Agency Problems," Journal of Economic Theory, Elsevier, vol. 61(1), pages 169-183, October.
    13. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
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