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Pré-Publication, Document De Travail Année : 2021

Certainty Equivalence and Noisy Redistribution

Résumé

This paper assesses the usefulness of stochastic contracts in the presence of informational asymmetries. It identifies circumstances where a stochastic redistribution policy is socially dominated by the deterministic policy where after-tax income lotteries are replaced with their certainty equivalent. It also provides a parametric example where every stochastic menu which has the optimal deterministic menu as certainty equivalent is dominated by the deterministic menu, while there exist feasible and incentive compatible lotteries improving locally upon the deterministic menu.
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Dates et versions

halshs-03359574 , version 1 (30-09-2021)

Identifiants

  • HAL Id : halshs-03359574 , version 1

Citer

Stéphane Gauthier, Guy Laroque. Certainty Equivalence and Noisy Redistribution. 2021. ⟨halshs-03359574⟩
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