Next Article in Journal / Special Issue
Multidimensional Screening with Complementary Activities: Regulating a Monopolist with Unknown Cost and Unknown Preference for Empire Building
Previous Article in Journal
Speech Is Silver, Silence Is Golden
Previous Article in Special Issue
Contract and Game Theory: Basic Concepts for Settings with Finite Horizons
Games 2013, 4(3), 508-531; doi:10.3390/g4030508

Solution Concepts of Principal-Agent Models with Unawareness of Actions

1 University of California at Berkeley, 4121 Etcheverry Hall, Berkeley, CA 94720, USA 2 Department of Economics, Hong Kong University of Science and Technology, Hong Kong
* Author to whom correspondence should be addressed.
Received: 14 February 2013 / Revised: 12 August 2013 / Accepted: 19 August 2013 / Published: 30 August 2013
(This article belongs to the Special Issue Contract Theory)
View Full-Text   |   Download PDF [302 KB, uploaded 30 August 2013]


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 unawareness; cognition; incomplete contracts; principal-agent relationship
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

Share & Cite This Article

Further Mendeley | CiteULike
Export to BibTeX |
EndNote |
MDPI and ACS Style

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

View more citation formats

Related Articles

Article Metrics

For more information on the journal, click here


[Return to top]
Games EISSN 2073-4336 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert