A reformulation of the maxmin expected utility model with application to agency theory

Invoking the parameterized distribution formulation of agency theory, the paper develops axiomatic foundations of the principal's and agent's choice behaviors that are representable by the maximization of the minimum expected utility over action-dependent sets of priors. In the context of this model, the paper also discusses some implications of ambiguity aversion for the design of optimal incentive schemes.

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Year of publication:	2009
Authors:	Karni, Edi
Published in:	Journal of Mathematical Economics. - Elsevier, ISSN 0304-4068. - Vol. 45.2009, 1-2, p. 97-112
Publisher:	Elsevier
Keywords:	Maxmin expected utility Principal-agent theory Moral hazard

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005216636