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Equity and adverse selection with correlated costs
Affiliation:1. University of Central Florida, CBA Department of Marketing, BAII-308B, 4000 Central Florida Blvd., Orlando, FL 32816-1400, United States;2. University of Florida, Gainesville, FL 32611, United States;1. Graduate School of Economics, Waseda University, 1-6-1, Nishi-Waseda, Shinjuku-ku, Tokyo 169-8050, Japan;2. HHL Leipzig Graduate School of Management, Jahnallee 59, 04109 Leipzig, Germany;1. School of Statistics and Mathematics, Zhejiang Gongshang University, Hangzhou 310018, China;2. School of Sciences, Zhejiang University of Science and Technology, Hangzhou 310023, China;1. Department of Economics and Finance, University of Canterbury, New Zealand;2. Department of Agricultural and Resource Economics, University of California, Davis, United States
Abstract:We show that agent concern with inequity is not constraining for a principal when the binary costs of two risk neutral agents are correlated.
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