Learning by doing vs. learning from others in a principal-agent model
Jasmina Arifovic () and
Alexander Karaivanov ()
Journal of Economic Dynamics and Control, 2010, vol. 34, issue 10, 1967-1992
We introduce learning in a principal-agent model of output sharing under moral hazard. We use social evolutionary learning to represent social learning and reinforcement, experience-weighted attraction (EWA) and individual evolutionary learning (IEL) to represent individual learning. Learning in the principal-agent model is difficult due to: the stochastic environment; the discontinuity in payoffs at the optimal contract; and the incorrect evaluation of foregone payoffs for IEL and EWA. Social learning is much more successful in adapting to the optimal contract than standard individual learning algorithms. A modified IEL using realized payoffs evaluation performs better but still falls short of social learning.
Keywords: Learning; Principal-agent; model; Moral; hazard (search for similar items in EconPapers)
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Working Paper: Learning by Doing vs. Learning from Others in a Principal-Agent Model (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:34:y:2010:i:10:p:1967-1992
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