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Common agency with risk-averse agent

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  • Semenov, Aggey

Abstract

In a common agency model with a risk-averse agent and private information distortion in the equilibrium policy from the first-best is greater compared to the case of a risk-neutral agent. The principals are unable to screen completely the agent's preferences if he is sufficiently risk-averse: there is bunching in the contract. The contribution schedules keep track of informational externality. However, when the coefficient of risk-aversion goes to zero the contributions become truthful as in the complete information case.

Suggested Citation

  • Semenov, Aggey, 2010. "Common agency with risk-averse agent," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 38-49, January.
    • Handle: RePEc:eee:mateco:v:46:y:2010:i:1:p:38-49
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    References listed on IDEAS

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    1. Martimort, David & Semenov, Aggey, 2008. "Ideological uncertainty and lobbying competition," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 456-481, April.
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    11. Martimort, David & Stole, Lars, 2009. "Selecting equilibria in common agency games," Journal of Economic Theory, Elsevier, vol. 144(2), pages 604-634, March.
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    Cited by:

    1. Graham Mallard, 2014. "Static Common Agency And Political Influence: An Evaluative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 17-35, February.

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    More about this item

    Keywords

    Common agency Asymmetric information Risk-aversion;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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