managerialandindividualdecisionproblemsasymmetric管理和個(gè)人的決策問(wèn)題的非對(duì)稱(chēng)-展示頁(yè)
2025-01-26 04:00本頁(yè)面
【正文】 c What kind of agent will accept the contract? Only low quality agents will accept the contract What will the principle’s payoff be? so the principles payoff will be lower than expected payoff lower than (189。 so principles expected payoff = 189。 ADVERSE SELECTION bad drives out good – Principle’s payoff is low unless revises the contract downwards A game theoretic illustration of the general adverse selection problem Chance AH H L accept Payoffs Principle Agent AL accept high negative 0 0 low positive 0 0 c Principle, P: offers agent (A) a contract, c, based on average quality Chance/Nature determines agent’s type/quality: quality is high (H) or low (L)。 ? the information about the agent is relevant to the principle’s evaluation of the transaction between them Adverse selection Adverse selection ? Examples – The riskiness of an investment for a venture capitalist (the principle) due to uncertainty about the effectiveness of new technology employed by an entrepreneur (the agent) – The riskiness of employing a new worker because uncertainty about their innate ability (productivity) – The state of health of someone buying health insurance ? If principle offers a contract that is based on expected quality this may only be acceptable to low quality agents ? ADVERSE SELECTION。D succeeds M+w Ramp。D fails Mc Don’t invest M Probability = Probability = Should Dr Punter invest? What would be a sensible decision rule? Dr Punter’s decision Dr Punter Invest in Ramp。D Chance Ramp。Section C – Managerial and individual decision problems ? Asymmetric information and risk – Main problems: adverse selection and moral hazard ? Applications and case studies: second hand car markets, the supply of health care, managerial incentives, hiring and contracting with employees Suggested background reading ? Allen et al. 2022. Managerial Economics. Norton. Part 7: Chapters 1315 ? Kreps, D. M. 2022. Microeconomics for Managers. Norton Chapters 1819 (1617 provide more background) ? Frank, R. H. 2022. Microeconomics and behaviour. McGraw Hill. Chapter 6 ? Wall,S., Minocha, S. and Rees, B. 2022. International Business, Pearson. Chapter 6 ? Grimes, P, Register, C. and Sharp, A. 2022. Economics of Social Issues, McGraw Hill. Chapter 15 ? Rasmusen, E. 2022. Games and Information, Blackwell. Chapters 79 Objectives ? By the end of this section you should be able to: – Characterise decision making under risk – Use detailed examples to explain what is implied by the concep
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