GT Lab Internal Seminar on December, 15: Maxim Senkov (CERGE-EI, Prague)
Topic: When the bias is useful: delegation to a rationally inattentive agent
Date & Time: December, 15; 15:00 - 16:00
Where: St.Petersburg, 3A Kantemirovskaya st. (HSE)
Time: 15:00 - 16:00
Abstract: A principal needs to delegate a decision under uncertainty to an agent and chooses among the candidates who differ in their prior beliefs. Prior to making the decision, agents can flexibly acquire costly information. We show that the principal generally benefits from delegation whenever the agent's belief differs from the belief of the principal. We also show that the same choice probabilities can be implemented in the best alternative choice problem by the usage of the system of bonuses. However, this equivalence result does not necessarily hold in the general problem formulation.
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