Economía
A principal-Agent Model with Ego in the Utility Function
Resumen
I develop a simple principaal agent model witah an Ego "component" in agentt´s utility function. The main result is that, when ability and effort are perfect substitutes in a job and the principal has superior information, it will be optimal for the principal to make the agent believe that he is high ability no matter whether if is true or not.That result is compatible with many firms "motivation" policies