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Working papers

Optimal Delegation, Limited Awareness and Financial Intermediation

We study the delegation problem between an investor and a financial intermediary, who not only has better information about the performance of the different investments but also has superior awareness of the available investment opportunities. The intermediary decides which of the feasible investments to reveal and which ones to hide. We show that the intermediary finds it optimal to make the investor aware of investment opportunities at the extremes, e.g. very risky and very safe projects, but leaves the investor unaware of intermediate options. We further study the role of competition between intermediaries and allow for investors with different levels of awareness to coexist in the same market. Self-reported data from customers in the Italian retail investment sector support the key predictions of the model: more knowledgable investors receive richer menus that are nevertheless perceived to have less products at the extremes.

Last change 06/03/2018

The Dual Approach to Recursive Optimization: Theory and Examples
PAVONI NICOLA (with C. Sleet and M. Messner)

Last change 12/09/2016

The Evolution of Awareness and Belief Ambiguity During the Process of High School Track Choice
PAVONI NICOLA and Pamela Giustinelli

Last change 15/11/2018

Efficient Child Care Subsidies
PAVONI NICOLA and Christine Ho

Last change 10/03/2016

Optimal Income Taxation with Asset Accumulation
PAVONI NICOLA A. Abraham and S. Koehne

Last change 10/12/2014

Present-Biased Preferences and Optimal Taxation of Parental Transfers
PAVONI NICOLA with H. Yazici

Last change 23/10/2013

Optimal Life-cycle Capital Taxation under Self-Control Problems
PAVONI NICOLA with H. Yazici

Last change 10/12/2014

The Precautionary Saving Effect of Government Consumption
PAVONI NICOLA with V. Ercolani

Last change 24/07/2014

Search and Work in Optimal Welfare Programs
PAVONI NICOLA with O. Setty and G. Violante

Last change 23/10/2013

Last change 23/10/2013