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September 10, 2025Manchester SchoolOpen Access

Asymmetric Priors in Agency Under Maximum‐Entropy

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Authors

ÓGÓscar Ramón Ramos GutiérrezUniversitat Autònoma de Barcelona

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Implication

This analysis reveals how asymmetric priors affect contract design and equilibrium in agency relations, pointing to critical implications for optimal contract theory.

Key Points

Improved information on output does not guarantee better equilibrium in agency contracts.
When the principal has private information, withholding it may lead to a more effective contract design.
If the agent possesses information, sharing it can enhance incentive compatibility in the contract.
The study highlights the significance of common prior assumptions for both parties in agency agreements.

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Óscar Ramón Ramos Gutiérrez (2025) studied this question.

synapsesocial.com/papers/68c192459b7b07f3a0616749 https://doi.org/10.1111/manc.70010

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Implication

This analysis reveals how asymmetric priors affect contract design and equilibrium in agency relations, pointing to critical implications for optimal contract theory.

Asymmetric Priors in Agency Under Maximum‐Entropy

Discussion

Member takes

Implication

Key Points

Cite This Study

Asymmetric Priors in Agency Under Maximum‐Entropy

Discussion

Member takes

Implication

Key Points

Cite This Study

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