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Recent work has shown that, in the presence of moral hazard, balanced budget Nash equilibria in groups are not pareto-optimal. This work shows that when agents misperceive the effects of their actions on the joint outcome, there exist a set of sharing rules which balance the budget and lead to a...
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(the market knows less about such investments than the firm's managers) and short-term managerial objectives (the managers … imperfect information and short-term managerial objectives induce managers to underinvest in long-run projects. We show that …
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