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The Virtue of Being Underestimated: A Note on Discriminatory Contracts in Hidden Information Models

Author

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  • Schnedler, Wendelin

    (University of Paderborn)

Abstract

A standard hidden information model is considered to study the influence of the a priori productivity distribution on the optimal contract. A priori more productive (hazard rate dominant) agents work less, enjoy lower rents, but generate a higher expected surplus.

Suggested Citation

  • Schnedler, Wendelin, 2001. "The Virtue of Being Underestimated: A Note on Discriminatory Contracts in Hidden Information Models," IZA Discussion Papers 342, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp342
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    Cited by:

    1. Schnedler Wendelin, 2011. "You Don’t Always Get What You Pay For: Bonuses, Perceived Income and Effort," German Economic Review, De Gruyter, vol. 12(1), pages 1-10, February.

    More about this item

    Keywords

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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