Showing 1 - 10 of 107
A principal acquires information about a shock and then discloses it to an agent. After the disclosure, the principal … disclosure rule. We show that even when the acquisition of perfect information is costless, the principal may optimally acquire …
Persistent link: https://www.econbiz.de/10010931180
We investigate the problem of Nash implementation in the presence of “partially honest” individuals. A partially honest player is one who has a strict preference for revealing the true state over lying when truthtelling does not lead to a worse outcome than that which obtains when lying. We...
Persistent link: https://www.econbiz.de/10011049868
Axiomatic analysis of bankruptcy problems reveals three major principles: (i) proportionality (PRO), (ii) equal awards (EA), and (iii) equal losses (EL). However, most real life bankruptcy procedures implement only the proportionality principle. We construct a noncooperative investment game to...
Persistent link: https://www.econbiz.de/10011049758
Cheating such as corruption and tax evasion is prevalent in the developing world; therefore, many interventions have been undertaken to reduce cheating in developing countries. Although some field evidence shows that poverty is correlated with cheating, the causal effect of poverty on cheating in...
Persistent link: https://www.econbiz.de/10012392147
We show that in markets with asymmetric information, even if there is full agreement on the choice of optimal information quality, entrusting the choice of (unverifiable) public information quality to traders who benefit from such information leads to inefficiencies. However, delegation of...
Persistent link: https://www.econbiz.de/10013000722
We consider the optimality of liquidated damages contracts in a setting of contractual ambiguity and potential for disputes. We show that when parties are ambiguity averse enough, they will optimally choose liquidated damages contracts and sacrifice risk sharing opportunities.
Persistent link: https://www.econbiz.de/10010906692
In this laboratory experiment we study the use of strategic ignorance to delegate real authority within a firm. A worker can gather information on investment projects, while a manager makes the implementation decision. The manager can monitor the worker. This allows her to exploit any...
Persistent link: https://www.econbiz.de/10010906694
I consider first-price auctions (FPA) and second-price auctions (SPA) with two asymmetric bidders. The FPA is known to be more profitable than the SPA if the strong bidder's distribution function is convex and the weak bidder's distribution is obtained by truncating or horizontally shifting the...
Persistent link: https://www.econbiz.de/10010906696
This paper studies a two-dimensional cheap talk game with two senders and one receiver. The senders possess the same information and sequentially send messages about that information. In one-dimensional sequential message cheap talk games where the state space is unbounded, the information is...
Persistent link: https://www.econbiz.de/10010931178
We study a repeated principal–agent model with subjective evaluations. We construct simple bonus-or-terminate incentive schemes. In these schemes, the principal evaluates the agent every T periods. The principal pays a bonus and asks the agent to work for T more periods if the evaluation is...
Persistent link: https://www.econbiz.de/10010931182