Related papers: Moral Hazard with Heterogeneous Beliefs
We consider the problem of finding Pareto-optimal allocations of risk among finitely many agents. The associated individual risk measures are law invariant, but with respect to agent-dependent and potentially heterogeneous reference…
We explore how large language models (LLMs) can be influenced by prompting them to alter their initial decisions and align them with established ethical frameworks. Our study is based on two experiments designed to assess the susceptibility…
This article studies the problem of evaluating the information that a Principal lacks when establishing an incentive contract with an Agent whose effort is not observable. The Principal ("she") pays a continuous rent to the Agent ("he"),…
In practice, incentive providers (i.e., principals) often cannot observe the reward realizations of incentivized agents, which is in contrast to many principal-agent models that have been previously studied. This information asymmetry…
This paper investigates a Pareto optimal insurance problem, where the insured maximizes her rank-dependent utility preference and the insurer is risk neutral and employs the mean-variance premium principle. To eliminate potential moral…
The problem of assessing the value of a candidate is viewed here as a multiple combination problem. On the one hand a candidate can be evaluated according to different criteria, and on the other hand several experts are supposed to assess…
A principal and an agent can launch a project under unanimous consent. Their individual payoffs from the project depend on an underlying state, and the agent privately knows his own preference. The principal can conduct a test to learn…
An ambitious goal for machine learning is to create agents that behave ethically: The capacity to abide by human moral norms would greatly expand the context in which autonomous agents could be practically and safely deployed, e.g. fully…
Many biological, psychological and economic experiments have been designed where an organism or individual must choose between two options that have the same expected reward but differ in the variance of reward received. In this way,…
The scale and terms of aggregate borrowing in an economy depend on the manner in which wealth is distributed across potential creditors with heterogeneous beliefs about the future. This distribution evolves over time as uncertainty is…
This paper investigates the dynamic reinsurance design problem under the mean-variance criterion, incorporating heterogeneous beliefs between the insurer and the reinsurer, and introducing an incentive compatibility constraint to address…
We consider a hidden-action principal-agent model, in which actions require different amounts of effort, and the agent privately knows his ability that determines his cost of effort. We show that linear contracts admit approximation…
Optimistic rollups are a popular and promising method of increasing the throughput capacity of their underlying chain. These methods rely on economic incentives to guarantee their security. We present a model of optimistic rollups that…
We examine settings in which agents choose behaviors and care about their neighbors' behaviors, but have incomplete information about the network in which they are embedded. We develop a model in which agents use local knowledge of their…
This paper proposes a unified theoretical model to identify and test a comprehensive set of probabilistic updating biases within a single framework. The model achieves separate identification by focusing on the updating of belief…
This paper develops a dynamic equilibrium model where agents exhibit a strong form of belief heterogeneity: they disagree about zero probability events. It is shown that, somewhat surprisingly, equilibrium exists in this setting, and that…
We study a continuous time contracting model in which a principal hires a risk averse agent to manage a project over a finite horizon and provides sequential payments whose timing is endogenously determined. The resulting nonzero-sum…
The thesis of this essay is that, in heterogeneous agent macroeconomics, the assumption of rational expectations about equilibrium prices is unrealistic and should be replaced. Rational expectations imply that decision makers forecast…
Machine learning has become increasingly popular in informing data-driven policy-making. Policies influence behavior in individuals or populations, and ideally, through observational signals, policy-makers learn which policies are…
Information exchange systems differ in many ways, but all share a common vulnerability to selfish behavior and free-riding. In this paper, we build incentives schemes based on social norms. Social norms prescribe a social strategy for the…