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Consider a principal - agent problem with three exogenous states of nature, s 1 , s 2 and s 3 ; the agent can exert
Consider a principalagent problem with three exogenous states of nature, s s and s; the
agent can exert two eort levels, aL and aH; and two possible output levels, distributed as
follows as a function of the state of nature and the eort level
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