Moral hazard resolved in communication for S4n-logic - Acyclic communication network case -

This paper investigates the role of communication among the principal and agents under uncertainty. We treat the problem: How epistemic conditions of communication will be able to settle a moral hazard in team in the principal-agent model under uncertainty. We shall propose a communication process to resolve the moral hazard in the principal-agent model by communication. We assume that the agents have the knowledge structure induced from a binary relation associated with the multi-modal logic bf S4n. We show that the moral hazard can be resolved if the principal and each agent communicate their expected marginal costs according to the acyclic communication graph.