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| Author: | Dixit, A. Jensen, H. |
| Title: | Common agency with rational expectations: theory and application to a monetary union |
| Journal: | Economic Journal
2003 : JUL, VOL. 113:489, p. 539-549 |
| Index terms: | Agency theory Expectations |
| Freeterms: | Monetary union |
| Language: | eng |
| Abstract: | The theory of common agency is extended to the situation where the principals' payoffs are affected by their ex ante expectations of the agent's ex post choice. The authors show how the usual truthful schedules must be modified to account for the rational expectations constraint. The model is applied to a monetary union where member governments influence the policy of the common central bank using incentive contracts. |
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