On the value of randomization

Stephane Gauthier and Guy Laroque

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: An optimal contract may involve randomization when the agents differ in their attitudes towards risk, so that randomization enables the principal to relax the incentive constraints. The paper provides a necessary and sufficient condition for local random deviations to be welfare improving in a neighborhood of a nonrandom optimum.

Keywords: Random taxation; stochastic contract; second best; tax evasion.; Taxation aléatoire; contrats aléatoires; second rang; fraude fiscale. (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-iue
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00639834v2
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Citations: View citations in EconPapers (6)

Published in 2011

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Related works:
Journal Article: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2014)
Working Paper: On the value of randomization (2012)
Working Paper: On the value of randomization (2011)
Working Paper: On the value of randomization (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00639834

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