On the value of randomization.

An optimal contract may involve randomization when the agents differ in their attitudes towards risk, so that randomization enables the principal to relax the incentive constraints. The paper provides a necessary and sufficient condition for local random deviations to be welfare improving in a neighborhood of a nonrandom optimum.

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Year of publication:	2011-10
Authors:	Gauthier, Stéphane ; Laroque, Guy
Institutions:	Centre d'Économie de la Sorbonne, Université Paris 1 (Panthéon-Sorbonne)
Subject:	Random taxation \| stochastic contract \| second best \| tax evasion

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Extent:	application/pdf
Series:	Documents de travail du Centre d'Economie de la Sorbonne. - ISSN 1955-611X.
Type of publication:	Book / Working Paper
Notes:	26 pages
Classification:	H21 - Efficiency; Optimal Taxation ; H23 - Externalities; Redistributive Effects ; Environmental Taxes and Subsidies ; H26 - Tax Evasion
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010721559