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The value of information regarding risk class for a monopoly insurer and its customers is examined in both symmetric … prefer contracting with hidden knowledge rather than symmetric information since the monopoly responds to adverse selection …
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We study the optimal regulation of a monopolist when intrinsic efficiency (intrinsic cost) and empire building tendency (marginal utility of output) are private information, but actual cost (the difference between intrinsic cost and effort level) is observable. This is a problem of...
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