Contracting under uncertainty: A principal-agent model with ambiguity averse parties

• 成果类型: Article
• 署名作者: Grant, Simon; Kline, J. Jude; Quiggin, John
• 署名单位: Australian National University; University of Queensland
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2018.02.008
• 发表日期: 2018
• 页码: 582-597
• 关键词: Linguistic ambiguity; principal-agent problem; State-contingent versus output contingent contracts

摘要

We introduce linguistic ambiguity into a principal-agent contracting framework. Contracts are drafted in a common language. Nevertheless, the principal and the agent may ultimately disagree about the terms of the contract that apply ex post. We presume that both parties are ambiguity averse and for tractability reasons that their preferences take a recursive constant absolute risk averse (RCARA) form. We consider various dispute resolution regimes and analyze how the optimal dispute resolution regime depends on the ambiguity attitudes of the parties. We also provide an axiomatization of the class of RCARA preferences. (C) 2018 Elsevier Inc. All rights reserved.