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Theory-Experimental Seminar
Universidad de Alicante
29-Apr-2024
Sala Vicens Vives – 14:30
We study a model in which a payoff-relevant state comprises of multiple, unknown attributes. The principal delegates learning about the attributes to an agent with different preferences, who chooses how to allocate a budget of informative tests across attributes. We derive the optimal learning strategy in this setting. Depending on the preferences, the agent may learn about different attributes or choose different intensities than the principal’s optimum. Notably, the agent may abstain from learning altogether. We then derive results for several applications. First, we consider optimal structure in organization and provide conditions for preference for diversity (preference for more biased agents from the principal’s point of view). Second, we consider a model of discrimination and show under which conditions delegating the learning role to an independent testing agency may or may not mitigate discriminatory tendency of a politician. Last, we provide an application to insurance setting.