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Ignorance in a multi-agent setting

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  • Pereira, Samuel C.A.

Abstract

I extend the Demski and Sappington (1984) model to the case where the agents are with some exogenous probability ignorant. I show that an ignorant agent either is not exposed to risk or he receives a lower transfer when the other agent is the informed type the principal wants to discourage choosing the contract designed for an ignorant agent.

Suggested Citation

  • Pereira, Samuel C.A., 2009. "Ignorance in a multi-agent setting," Economics Letters, Elsevier, vol. 105(3), pages 264-266, December.
    • Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:264-266
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    References listed on IDEAS

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    1. Arya, Anil & Glover, Jonathan & Rajan, Uday, 2000. "Implementation in Principal-Agent Models of Adverse Selection," Journal of Economic Theory, Elsevier, vol. 93(1), pages 87-109, July.
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    1. Xie, Yimei & Ding, Chuan & Li, Yang & Wang, Kaihong, 2023. "Optimal incentive contract in continuous time with different behavior relationships between agents," International Review of Financial Analysis, Elsevier, vol. 86(C).

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