Common agency with risk-averse agent
In a common agency model with a risk-averse agent and private information distortion in the equilibrium policy from the first-best is greater compared to the case of a risk-neutral agent. The principals are unable to screen completely the agent's preferences if he is sufficiently risk-averse: there is bunching in the contract. The contribution schedules keep track of informational externality. However, when the coefficient of risk-aversion goes to zero the contributions become truthful as in the complete information case.
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- Martimort, David & Semenov, Aggey, 2008.
"Ideological uncertainty and lobbying competition,"
Journal of Public Economics,
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- Martimort, David & Semenov, Aggey, 2008. "Ideological Uncertainty and Lobbying Competition," MPRA Paper 6992, University Library of Munich, Germany.
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- David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July.
- David Martimort & Lars Stole, 2001. "The Revelation and Delegation Principles in Common Agency Games," CESifo Working Paper Series 575, CESifo Group Munich.
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- Martimort, David & Stole, Lars, 2009. "Selecting equilibria in common agency games," Journal of Economic Theory, Elsevier, vol. 144(2), pages 604-634, March. Full references (including those not matched with items on IDEAS)
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