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

Wendelin Schnedler

No 18/2001, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

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: adverse selection; statistical discrimination; stochastic order relation (search for similar items in EconPapers)
JEL-codes: D82 J71 (search for similar items in EconPapers)
Date: 2001
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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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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bonedp:182001

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