Long-sighted principal and myopic agents

Article Abstract:

Myopic agents deter the amassing of capital and may ruin the relationship between the principals and the agents. In addition, when a manager or a forward-looking principal plans an investment scheme, he optimizes the discounted utilities of forward-looking investors. But at the same time, he considers the utility functions of myopic agents who also contribute to the company's operations. Forward-looking principals and myopic agents are two different types of economic participants. The former thrives on a long-lived horizon while the latter exists for a period only.

Capital Accum by Financial Institns, Myopia, Capital

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Finite horizon optimization: sensitivity and continuity in multi-sectoral models

Article Abstract:

A study was conducted to examine the sensitivity and continuity of finite horizon optimization. A general multi-sectoral model defines intertemporal optimization and assumes conditions of non-convexity and technological innovations. Additionally, the model prescribes the sensitivity of investment decision to the length of the decision horizon. Results show that values which differ from investment choices exhibit insensitiveness to horizon length even for the multi-sectoral model.

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A second welfare theorem for constrained efficient allocations in incomplete markets

Article Abstract:

The market situation characterized by a constrained efficient allocation that is capable of supporting an incomplete markets equilibrium is discussed. Such a situation is obtained when an appropriate dissemination of the endowments of the first period is undertaken. This kind of allocation is proven to exist in an economy when it assumes an open and dense nature in an economy.

Models, Markets (Economics), Welfare, Public assistance

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