The virtue of being underestimated : a note on discriminatory contracts in hidden information models

Wendelin Schnedler

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.

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Year of publication:	2001
Authors:	Schnedler, Wendelin
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Adverse selection \| statistical discrimination \| stochastic order relation \| Adverse Selektion \| Prinzipal-Agent-Theorie \| Agency theory \| Leistungsanreiz \| Performance incentive \| Arbeitsproduktivität \| Labour productivity \| Stochastischer Prozess \| Stochastic process \| Theorie \| Theory