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Asymmetric Awareness and Heterogeneous Agents

Author

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  • Antoine Dubus

    (SES - Département Sciences Economiques et Sociales - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris, ECO-Télécom Paris - Equipe Eco Economie - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

I consider the principal-agent model with asymmetric awareness and introduce heterogeneity of the agents on their aversion to effort. I discuss the optimal contract and market structure in a market with an aware principal and unaware agents. When the principal faces two types of agents, one being more effort-averse than the other, the contract he proposes either pools them, separates them, or excludes the more effort-averse agents of the market depending on their proportion. In a first-best world, all the agents remain unaware. In a second-best one, the principal increases the awareness of the agents, to a level which depends on the nature of the contract.

Suggested Citation

  • Antoine Dubus, 2017. "Asymmetric Awareness and Heterogeneous Agents," Working Papers hal-01521487, HAL.
    • Handle: RePEc:hal:wpaper:hal-01521487
    Note: View the original document on HAL open archive server: https://hal.science/hal-01521487v3
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economics of Contract: Theory; Unawareness; Asymmetric and Private Information;
    All these keywords.

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