Ambiguity, Robustness, and Contract Design

Suren Basov

Chapter Chapter 2 in Social Norms, Bounded Rationality and Optimal Contracts, 2016, pp 15-33 from Springer

Abstract: Abstract In this chapter we consider the choice economic agents make under ambiguity, i.e. in a situation when they do not have well-defined probabilistic beliefs. The agents still have a well-defined objective they maximize, but even this minimal deviation from the standard model allows to explain some, otherwise puzzling, features of real life contracts.

Keywords: Expected Utility (EU); Maximin Preferences; Yannelis; Incentive Compatibility; Ambiguity Aversion (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:steccp:978-981-10-1041-5_2

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DOI: 10.1007/978-981-10-1041-5_2

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