Abstract
This paper studies the problem of screening teams of either moral or altruistic agents, in a setting where agents choose whether or not to exert effort in order to achieve a high output for the principal. I show that there exists no separating equilibrium menu of contracts that induces the agents to reveal their types unless the principal either (i) excludes one group from the productive relationship, or (ii) demands different efforts from different preference groups. I also characterize the contract-inducing pooling equilibria in which all agents are incentivized to exert a high level of effort.
Highlights
The results presented above, in line with the literature on screening prosocial preferences, imply that the principal may be unable to construct a menu of contracts that is successful in screening teams of agents belonging to different preference groups
The interest lies in characterizing a separating equilibrium in which moral and altruistic individuals reveal their type and exert a high level of effort in the task proposed by the principal
The results are negative, but in line with the literature of adverse selection followed by moral hazard: screening prosocial preferences is not possible unless the principal distorts the allocation provided to the least preferred group by either excluding them from the relationship or by inducing a different level of effort
Summary
Citation: Sarkisian, R. ScreeningTeams of Moral and Altruistic Agents.Games 2021, 12, 77. https://doi.org/10.3390/g12040077Academic Editors: Heinrich H. Nax and Ulrich BergerReceived: 30 August 2021Accepted: 13 October 2021Published: 20 October 2021Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.Licensee MDPI, Basel, Switzerland.Attribution (CC BY) license (https://
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