On the value of randomization
An optimal contract may involve randomization when the agents differ in their attitudes towards risk, so that randomization enables the principal to relax the incentive constraints. The paper provides a necessary and sufficient condition for local random deviations to be welfare improving in a neighborhood of a nonrandom optimum.
|Date of creation:||Oct 2011|
|Date of revision:||Sep 2012|
|Contact details of provider:|| Postal: 106-112 boulevard de l'Hôpital 75 647 PARIS CEDEX 13|
Phone: + 33 44 07 81 00
Fax: + 33 1 44 07 83 01
Web page: http://centredeconomiesorbonne.univ-paris1.fr/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brito, Dagobert L. & Hamilton, Jonathan H. & Slutsky, Steven M. & Stiglitz, Joseph E., 1995.
"Randomization in optimal income tax schedules,"
Journal of Public Economics,
Elsevier, vol. 56(2), pages 189-223, February.
- Brito, D.L. & Hamilton, J.H. & Slutsky, S.M. & Stiglitz, J.E., 1989. "Randomization In Optimal Income Tax Schedules," Papers 89-6, Florida - College of Business Administration.
- Dagobert L. Brito & Jonathan H. Hamilton & Steven M. Slutsky & Joseph E. Stiglitz, 1990. "Randomization in Optimal Income Tax Schedules," NBER Working Papers 3289, National Bureau of Economic Research, Inc.
- Joseph E. Stiglitz, 1981.
"Self-Selection and Pareto Efficient Taxation,"
NBER Working Papers
0632, National Bureau of Economic Research, Inc.
- Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
- Slemrod, Joel & Traxler, Christian, 2010.
"Optimal observability in a linear income tax,"
Elsevier, vol. 108(2), pages 105-108, August.
- Joel Slemrod & Christian Traxler, 2010. "Optimal observability in a linear income tax," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2010_04, Max Planck Institute for Research on Collective Goods.
- Guesnerie Roger & Seade Jesus, 1981.
"Nonlinear pricing in a finite economy,"
CEPREMAP Working Papers (Couverture Orange)
- Alberto Bennardo & P.A. Chiappori, 2002.
"Bertrand and Walras equilibria under moral hazard,"
CSEF Working Papers
87, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Bennardo, Alberto & Chiappori, Pierre-André, 2002. "Bertrand and Walras Equilibria Under Moral Hazard," CEPR Discussion Papers 3650, C.E.P.R. Discussion Papers.
- Alberto Bennardo & Pierre-Andre Chiappori, 2003. "Bertrand and Walras Equilibria Under Moral Hazard," Levine's Working Paper Archive 618897000000000748, David K. Levine.
- repec:kap:ejlwec:v:18:y:2004:i:3:p:319-341 is not listed on IDEAS
- Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.
- Strausz, Roland, 2006.
"Deterministic versus stochastic mechanisms in principal-agent models,"
Journal of Economic Theory,
Elsevier, vol. 128(1), pages 306-314, May.
- Roland Strausz, . "Deterministic versus Stochastic Mechanisms in Principal--Agent Models," Papers 020, Departmental Working Papers.
- Richard Arnott & Joseph E. Stiglitz, 1988.
"Randomization with Asymmetric Information,"
RAND Journal of Economics,
The RAND Corporation, vol. 19(3), pages 344-362, Autumn.
- Richard Arnott & Joseph E Stiglitz, 2010. "Randomization with Asymmetric Information," Levine's Working Paper Archive 2054, David K. Levine.
- Richard J. Arnott & Joseph E. Stiglitz, 1988. "Randomization with Asymmetric Information," NBER Working Papers 2507, National Bureau of Economic Research, Inc.
- Martin Hellwig, 2005.
"The Undesirability of Randomized Income Taxation under Decreasing Risk Aversion,"
Working Paper Series of the Max Planck Institute for Research on Collective Goods
2005_27, Max Planck Institute for Research on Collective Goods.
- Hellwig, Martin F., 2007. "The undesirability of randomized income taxation under decreasing risk aversion," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 791-816, April.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- Weiss, Laurence, 1976. "The Desirability of Cheating Incentives and Randomness in the Optimal Income Tax," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1343-52, December.
- Cremer, Helmuth & Gahvari, Firouz, 1993. "Tax evasion and optimal commodity taxation," Journal of Public Economics, Elsevier, vol. 50(2), pages 261-275, February.
When requesting a correction, please mention this item's handle: RePEc:mse:cesdoc:11062r. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lucie Label)
If references are entirely missing, you can add them using this form.