Misperceptions, Moral Hazard, and Incentives in Groups
Technical Working Paper 0035
DOI 10.3386/t0035
Issue Date
Recent work has shown that, in the presence of moral hazard, balanced budget Nash equilibria in groups are not pareto-optimal. This work shows that when agents misperceive the effects of their actions on the joint outcome, there exist a set of sharing rules which balance the budget and lead to a pareto-optimal Nash equilibria.
Published Versions
Gaynor, Martin. "Misperceptions, Moral Hazard and Incentives in Groups." Managerial and Decision Economics, Vol. 7, No. 4, (1986), pp. 279-282.