Adverse Selection Models with Three States of Nature

Daniela Marinescu and Dumitru Marin
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Daniela Marinescu: Bucharest Academy of Economic Studies
Dumitru Marin: Bucharest Academy of Economic Studies

Theoretical and Applied Economics, 2011, vol. XVIII(2011), issue 2(555), 33-46

Abstract: In the paper we analyze an adverse selection model with three states of nature, where both the Principal and the Agent are risk neutral. When solving the model, we use the informational rents and the efforts as variables. We derive the optimal contract in the situation of asymmetric information. The paper ends with the characteristics of the optimal contract and the main conclusions of the model.

Keywords: adverse selection; asymmetric information; informational rent; optimal contract. (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:2(555):y:2011:i:2(555):p:33-46

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