SFB 303 Discussion Paper No. A - 190

Author: Jost, Peter-Jürgen
Title: Signalling Games and the Role of Precommitment
Abstract: We examine the set of sequential equilibria in the context of a principal-agent relationship with moral hazard issues in which the agent is uncertain about the principal's control-costs. In a first game form of this relationship the principal has to decide on his control behavior after the realization of an outcome. In a second investigation the principal can precommit himself on control at the time of contracting. We demonstrate that this change of the rules has tremendous effects on equilibria.
Creation-Date: July 1988
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