Asymmetric Awareness and Moral Hazzard

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.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.format.mimetype	application/pdf
dc.identifier.issn	1725-6704
dc.identifier.uri	https://hdl.handle.net/1814/24274
dc.language.iso	en	en
dc.neeo.contributor	AUSTER\|Sarah\|aut\|
dc.relation.ispartofseries	EUI ECO	en
dc.relation.ispartofseries	2012/23	en
dc.rights	info:eu-repo/semantics/openAccess
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
dspace.entity.type	Publication
eui.subscribe.skip	true