A Reformulation of the Maxmin Expected Utility Model with Application to Agency Theory
نویسنده
چکیده
Invoking the parametrized distribution formulation of agency theory, the paper develops axiomatic foundations of the principal’s and agent’s choice behaviors that are representable by the maximization of the minimum expected utility over actiondependent sets of priors. In the context of this model, the paper also discusses some implications of uncertainty aversion for the design of optimal incentive schemes. ∗I am grateful to the National Science Foundation for fincancial support under grant SES-0314249.
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