A reformulation of the maxmin expected utility model with application to agency theory

Edi Karni

Journal of Mathematical Economics, 2009, vol. 45, issue 1-2, 97-112

Abstract: Invoking the parameterized distribution formulation of agency theory, the paper develops axiomatic foundations of the principal's and agent's choice behaviors that are representable by the maximization of the minimum expected utility over action-dependent sets of priors. In the context of this model, the paper also discusses some implications of ambiguity aversion for the design of optimal incentive schemes.

Keywords: Maxmin; expected; utility; Principal-agent; theory; Moral; hazard (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:45:y:2009:i:1-2:p:97-112

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