Games 2013, 4(3), 508-531; doi:10.3390/g4030508
Article

Solution Concepts of Principal-Agent Models with Unawareness of Actions

1email and 2,* email
Received: 14 February 2013; in revised form: 12 August 2013 / Accepted: 19 August 2013 / Published: 30 August 2013
(This article belongs to the Special Issue Contract Theory)
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract: In numerous economic scenarios, contracting parties may not have a clear picture of all the relevant aspects. A contracting party may be unaware of what she and/or others are entitled to determine. Therefore, she may reject a contract that is too good to be true. Further, a contracting party may actively exert cognitive effort before signing a contract, so as to avoid being trapped into the contractual agreement ex post. In this paper, we propose a general framework to investigate these strategic interactions with unawareness, reasoning and cognition and intend to unify the solution concepts in the contracting context with unawareness. We build our conceptual framework upon the classical principal-agent relationship and compare the behaviors under various degrees of the unaware agent’s sophistication.
Keywords: unawareness; cognition; incomplete contracts; principal-agent relationship
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MDPI and ACS Style

Chen, Y.-J.; Zhao, X. Solution Concepts of Principal-Agent Models with Unawareness of Actions. Games 2013, 4, 508-531.

AMA Style

Chen Y-J, Zhao X. Solution Concepts of Principal-Agent Models with Unawareness of Actions. Games. 2013; 4(3):508-531.

Chicago/Turabian Style

Chen, Ying-Ju; Zhao, Xiaojian. 2013. "Solution Concepts of Principal-Agent Models with Unawareness of Actions." Games 4, no. 3: 508-531.

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