Project selection with partial observability of types and limited penalties by Albin Erlanson

Join us for another event in the Microeconomics Internal Research Seminar Series, Autumn Term 2023.

Albin Erlanson, will present this internal seminar on Project selection with partial observability of types and limited penalties.

Abstract

A principal faces a choice between two projects, a and b. The principal knows that project a is κ costlier than b, but a is always weakly more valuable than b. An agent possesses precise knowledge of the value of each project and receives a linear fraction of the chosen project's value, without shouldering the additional cost of the project. However, monetary transfers are not feasible, and the principal's available penalty in case of dishonesty by the agent is to deduct a fraction p from their payoff. We investigate two scenarios: one where the principal observers the values of both projects, independent of which project is chosen, and another where the principal only observes the value of the selected project. We determine the mechanism that maximizes the principal's expected utility in both cases.

This seminar will be held in the Economics Common Room on Monday 20th November 2023 at 3.30pm. This event is open to all levels of study and is also open to the public.

To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Microeconomics Research Seminar Series.