Asymmetric Awareness and Moral Hazzard

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dc.contributor.author AUSTER, Sarah
dc.date.accessioned 2012-11-05T16:23:28Z
dc.date.available 2012-11-05T16:23:28Z
dc.date.issued 2012
dc.identifier.issn 1725-6704
dc.identifier.uri http://hdl.handle.net/1814/24274
dc.description.abstract This paper introduces asymmetric awareness into the classical principal-agent model and discusses the optimal contract between a fully aware principal and an unaware agent. The principal enlarges the agent’s awareness strategically when proposing the contract. He faces a trade-off between participation and incentives. Leaving the agent unaware allows him to exploit the agent’s incomplete understanding of the world. Making the agent aware enables the principal to use the revealed contingencies as signals about the agent’s action choice. The optimal contract reveals contingencies that have low probability but are highly informative about the agent’s effort. en
dc.language.iso en en
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2012/23 en
dc.subject Unawareness en
dc.subject Moral Hazard en
dc.subject Incomplete Contracts en
dc.subject D01 en
dc.subject D83 en
dc.subject D86 en
dc.title Asymmetric Awareness and Moral Hazzard en
dc.type Working Paper en
dc.neeo.contributor AUSTER|Sarah|aut|


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