Contract design and costly verification games / Chongwoo Choe Choe, Chongwoo

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Author
Choe, Chongwoo
Appears In
Journal of Economic Behavior & Organization
Subjects
Contracts - Mathematical models.; Economics; Contracts -- Economic aspects
Audience
Academic
Summary
The signalling subgame was considered to assess the design of contract and verification under an investor-entrepreneur contract. The game indicated that truth-telling and deterministic verification are not part of an equilibrium behavior as shown by the presence of a unique Perfect Bayesian Equilibrium in mixed strategies. Consideration of the entire game also revealed that less verification expenditure is achieved under a contract formulated by an informed trader.
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http://trove.nla.gov.au/work/234039
Work ID
234039

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