• DOI:10.2139/ssrn.1743734
Corpus ID: 59065899

Incentives for Unaware Agents

@article{Thadden2011IncentivesFU,
  title={Incentives for Unaware Agents},
  author={Ernst-Ludwig von Thadden and X. Zhao},
  journal={Cognitive Social Science eJournal},
  year={2011}
}

• Ernst-Ludwig von Thadden, X. Zhao
• Published 2011
• Cognitive Social Science eJournal

The paper introduces the problem of unawareness into Principal-Agent theory and discusses optimal incentive contracts when the agent may be unaware of her action space. Depending on the agent's default behavior, it can be optimal for the principal to propose an incomplete contract (that keeps the agent unaware) or a complete contract. The key tradeoff is that of enlarging the agent's choice set versus adding costly incentive constraints. If agents differ in their unawareness, optimal contracts… Expand

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