Motivated Agents and Competition with Incomplete Information

AROZAMENA, LEANDRO; SEBASTIÁN BAUER; FEDERICO WEINSCHELBAUM

Congreso; LV Reunión Anual de la Asociación Argentina de Economía Política; 2020

AAEP

In a moral hazard context, we examine a market where a profit- and a mission-orientedprincipal compete to hire agents. In addition to valuing monetary rewards, some of the agentsare intrinsically motivated when working for the mission-oriented principal. However, thatspecial motivation is each agent’s private information. Combining moral hazard and adverseselection, then, we obtain conditions under which, in equilibrium, agents are assorted accordingto their motivation, and describe the equilibrium incentive schemes.