Blending empathy into contract theory

Blending empathy into contract theory

We got to discuss the interdependent preferences. We study how to incentivize a group (a team) of rational agents? Existing "team" agency theories assume agents are driven by their material self-interest (e.g., monetary payment, cost of effort). Experiments: violations of the "self-interest" hypothesis. Altruism is driven by affective empathy, i.e., an ability that allows us experience the emotions of others. We introduce affective empathy to a team agency problem. We then provide recommendations for contract design.

14/Apr/2023
University of Waterloo
Debraj Ray