Multi-Task Agency with Unawareness

The paper introduces the problem of unawareness into multi-dimensional Principal-Agent theory. We introduce two key parameters to describe the problem, the extent and the e ffect of unawareness, show under what conditions it is optimal for the Principal to propose an incomplete or a complete contract, and characterize the incentive power of optimal linear contracts. If Agents differ in their unawareness, optimal incentive schemes can be distorted for both aware and unaware Agents, because, di fferent from standard contract theory, the Single-Crossing Property fails to hold. In this case, even aware Agents can be subject to ine ciently high or low incentives