Common agency with risk-averse agent |
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Authors: | Aggey Semenov |
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Institution: | Department of Economics, National University of Singapore, 1 Arts Link, Singapore 117570, Singapore |
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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. |
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Keywords: | D72 D82 |
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