Micro Theory Reading Group
MIWP (Microeconomics Work in Progress) - Costas Cavounidis (Warwick)
Location: via Microsoft Teams
Costas will present: Losing by Betting on Success (w/ Sambuddha Ghosh).
​Abstract: A principal incentivizes agents to exert effort, when only the success or failure of a joint project is observable. We construct a mechanism in which agents message the principal before exerting effort. The mechanism interprets messages as bets on the success of the project. We show that if full effort is uniquely implementable by some scheme, our mechanism can uniquely implement it using the equilibrium transfers from any Nash implementation. Hence, the result of high and unequal wages in Winter 2004 is reversed if the principal can solicit messages. This despite the fact that agents have no information to signal.
Teams link: Click here to join the meeting