Moral hazard resolved by common-knowledge in principal-agent model. (1st January 2012)

• Record Type: Journal Article
• Authors: Matsuhisa, Takashi
• Is Part Of: International journal of intelligent information and database systems. Volume 6:Number 3(2012)
• Page Start: 220
• Page End: 230
• Publication Date: 2012-01-01
• Subjects: agreeing to disagree -- consensus -- common-knowledge -- moral hazard -- principal-agent model under uncertainty -- multi-modal logic; Database management -- Computer programs -- Periodicals; Information retrieval -- Computer programs -- Periodicals; Information storage and retrieval systems -- Computer programs -- Periodicals; Artificial intelligence -- Periodicals; Expert systems (Computer science) -- Periodicals; Intelligent agents (Computer software) -- Periodicals; 006.33
• Languages: English
• ISSNs: 1751-5858

Abstract

This paper investigates the role of common-knowledge in the principal-agent model under uncertainty. We treat the problem: How epistemic conditions will be able to settle a moral hazard in team in the principal-agent model under uncertainty. We shall propose a resolution programme for the moral hazard in the principal-agent model by common-knowledge. Let us assume that the agents have the knowledge structure induced from a binary relation associated with the multi-modal logic S5n or S4n . We show that the moral hazard can be resolved in the principal-agent model under uncertainty if the agents commonly know all their own costs.