Contracting in Vague Environments∗

A modified branch and bound algorithm for a vague flow-shop scheduling problem

Uncertainty plays a significant role in modeling and optimization of real world systems. Among uncertain approaches, fuzziness describes impreciseness while for ambiguity another definition is required. Vagueness is a probabilistic model of uncertainty being helpful to include ambiguity into modeling different processes especially in industrial systems. In this paper, a vague set based on dista...

Framing contingencies in contracts

The paper develops a contracting model where the principal frames the contract when the agent is unaware of some contingencies, yet is aware that she may be unaware. We call the contract vague if the agent is still unaware of some contingencies after understanding the contract. We show that the optimal contract is vague if and only if the principal exploits the agent. Applying the model to an i...

Vague Terms : Contracting when Precision in Terms is Infeasible by Benjamin

This article considers the consequence of incomplete contracts that arise due to difficulties in precisely describing potentially relevant contingencies. Unlike much of the literature, this article concludes that the resulting incompleteness could often be immaterial with respect to economic efficiency. Indeed, attempts to “improve” matters by increasing the accuracy with which the courts deter...

Exactly What Happens After the Anscombe-Aumann Race? Representing Preferences in Vague Environments

This paper derives a representation of preferences for a choice theory with vague environments; vague in the sense that the agent does not know the precise lotteries over outcomes conditional on states. Instead, he knows only a possible set of these lotteries for each state. Thus, this paper’s main departure from the standard subjective expected utility model is to relax an assumption about the...

Contracting Tasks in Multi-Agent Environments