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Type	Working Paper
Scope	Discipline-based scholarship
Title	On the Notion of the First Best in Standard Hidden Action Problems
Organization Unit	Information Economics and Contract Theory (Christian Ewerhart)
Authors	Christian Ewerhart Christoph Nitzsche
Language	English
Institution	University of Zurich
Series Name	Working paper series / Institute for Empirical Research in Economics
Number	No. 229
ISSN	1424-0459
Date	2005
Abstract Text	It is well known that ex-ante randomization can improve uponnsecond best contracts in principal-agent problems. In this note, we show that even the first-best can be dominated by a random contract. Our example isncast in a standard textbook set-up with two effort levels and two states of nature.
Official URL	http://www.econ.uzh.ch/wp.html
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