Tuesday, October 16, 2007

 

A Model of Probabilistic Rules for Project Acceptance. This is inspired by a recent working paper by Vickers and Armstrong. Project i has payoff (Ui,Vi) to agent and principal and is feasible with probability theta_i. Both players must agree to implement a project; otherwise they get (0,0). They can agree to one project at most. Only the agent observes which projects are available. He can keep silent or he can truthfully reveal the (U,V) of a project, but he cannot lie. (Click here to read more.)

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