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.
Year of publication: |
2010
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Authors: | Semenov, Aggey |
Published in: |
Journal of Mathematical Economics. - Elsevier, ISSN 0304-4068. - Vol. 46.2010, 1, p. 38-49
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Publisher: |
Elsevier |
Subject: | Common agency Asymmetric information Risk-aversion |
Saved in:
Online Resource
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