Nothing Special   »   [go: up one dir, main page]

  EconPapers    
Economics at your fingertips  
 

The value of information in a principal–agent model with moral hazard: The ex post contracting case

Randy Silvers

Games and Economic Behavior, 2012, vol. 74, issue 1, 352-365

Abstract: In a principal–agent model with moral hazard, a signal about the principalʼs technology — the stochastic mapping from the agentʼs action to the outcome — is observed before the contract is offered. The signal is either uninformative (null information), informative and observed only by the principal (private information), or also observed by the agent (public information). We show that, from an ex ante standpoint (before the signal is observed): (i) the agent prefers private to both null and public information; (ii) the principal sometimes prefers null to both private and public information; and (iii) when the principal prefers public to null information, she prefers public to private information, whereas the agent prefers private to public information. In this last situation, we also show that (iv) for any separating equilibrium with private information, there exists a contract with public information that both strictly prefer.

Keywords: Moral hazard; Principal–agent; Informed principal; Information; Technology; Ex post contracting (search for similar items in EconPapers)
JEL-codes: D82 D86 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825611001138
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:74:y:2012:i:1:p:352-365

DOI: 10.1016/j.geb.2011.07.002

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2024-12-28
Handle: RePEc:eee:gamebe:v:74:y:2012:i:1:p:352-365