Artikel

Optimal delegated search with adverse selection and moral hazard

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.

Language: Englisch

Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 11 ; Year: 2016 ; Issue: 1 ; Pages: 253-278 ; New Haven, CT: The Econometric Society

Classification: Wirtschaft
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Economics of Contract: Theory
Noncooperative Games

Subject: Adverse selection
bonus contracts
delegated search
moral hazard
optimal stopping

Event: Geistige Schöpfung

(who): Ulbricht, Robert

Event: Veröffentlichung

(who): The Econometric Society

(where): New Haven, CT

(when): 2016

DOI: doi:10.3982/TE1801

Handle: http://hdl.handle.net/10419/150278

Last update: 10.03.2025, 11:41 AM CET

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Object type

Artikel

Associated

Ulbricht, Robert
The Econometric Society

Time of origin

2016

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Optimal delegated search with adverse selection and moral hazard

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