Decision Sciences
5 years ago

Corporations Can Exploit Consumers Through Hidden Actions, Finds Study

The B E Journal of Theoretical Economics
The Full Surplus Extraction Theorem with Hidden Actions
Ichiro Obara

Paper Summary

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The article shows that in a scenario where people make secret choices before their true abilities are known, it can be tricky for a boss to get the most out of them. However, if everyone acts in a smart way, the boss can still get the best results. By having people reveal both their abilities and their choices, the boss can make sure everyone is doing their best. So, even though it's not always perfect, with the right strategy, the boss can still get the most out of their team.