The Virtue of Being Underestimated: A Note on Discriminatory Contracts in Hidden Information Models

Wendelin Schnedler

No 342, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A standard hidden information model is considered to study the influence of the a priori productivity distribution on the optimal contract. A priori more productive (hazard rate dominant) agents work less, enjoy lower rents, but generate a higher expected surplus.

Keywords: stochastic order relation; statistical discrimination; Adverse selection (search for similar items in EconPapers)
JEL-codes: D82 J71 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2001-08
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Economics Letters, 2002, 75 (2), 171-178

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Related works:
Journal Article: The virtue of being underestimated: a note on discriminatory contracts in hidden information models (2002)
Working Paper: The Virtue of Being Underestimated: A Note on Discriminatory Contracts in Hidden Information Models (2001)
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