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Ulbricht, Robert
(2016)
Optimal Delegated Search with Adverse Selection and Moral Hazard.
Theoretical Economics, 11 (1).
pp. 253-278.
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Abstract
The paper studies a model of delegated search. The distribution of search revenues is unknown to the principal and has to be elicited from the agent in order to design the optimal search policy. At the same time, the search process is unobservable, requiring search to be self-enforcing. The two information asymmetries are mutually enforcing each other; if one is relaxed, delegated search is efficient. With both asymmetries prevailing simultaneously, search is almost surely inefficient (it is stopped too early). Second-best remuneration is shown to optimally utilize a menu of simple bonus contracts. In contrast to standard adverse selection problems, indirect nonlinear tariffs are strictly dominated.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | January 2016 |
| Refereed: | Yes |
| Uncontrolled Keywords: | adverse selection, bonus contracts, delegated search, moral hazard, optimal stopping |
| JEL Classification: | C72 - Noncooperative Games D82 - Asymmetric and Private Information D83 - Search; Learning; Information and Knowledge; Communication; Belief D86 - Economics of Contract - Theory |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 16 Mar 2015 14:55 |
| Last Modified: | 27 Oct 2021 13:36 |
| OAI Identifier: | oai:tse-fr.eu:28986 |
| URI: | https://publications.ut-capitole.fr/id/eprint/16692 |
Available Versions of this Item
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Optimal Delegated Search with Adverse Selection and Moral Hazard. (deposited 09 Jul 2014 17:42)
- Optimal Delegated Search with Adverse Selection and Moral Hazard. (deposited 16 Mar 2015 14:55) [Currently Displayed]
